Opinion
# 2018-015-118 Claim No. 116797
07-25-2018
KKS PROPERTIES, LLC v. THE STATE OF NEW YORK
Harris, Conway & Donovan, PLLC By: Ryan T. Donovan, Esq. E. Stewart Jones Hacker Murphy, LLP By: Patrick L. Seely, Jr., Esq. Honorable Barbara D. Underwood, Attorney General By: Audrey Alexander, Esq., Assistant Attorney General
Synopsis
Consequential and direct damages were awarded for an appropriation to construct the Slingerlands Bypass.
Case information
| UID: | 2018-015-118 |
| Claimant(s): | KKS PROPERTIES, LLC |
| Claimant short name: | KKS |
| Footnote (claimant name) : | |
| Defendant(s): | THE STATE OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 116797 |
| Motion number(s): | |
| Cross-motion number(s): | |
| Judge: | FRANCIS T. COLLINS |
| Claimant's attorney: | Harris, Conway & Donovan, PLLC By: Ryan T. Donovan, Esq. E. Stewart Jones Hacker Murphy, LLP By: Patrick L. Seely, Jr., Esq. |
| Defendant's attorney: | Honorable Barbara D. Underwood, Attorney General By: Audrey Alexander, Esq., Assistant Attorney General |
| Third-party defendant's attorney: | |
| Signature date: | July 25, 2018 |
| City: | Saratoga Springs |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
Claimant, KKS Properties, LLC, seeks damages as a result of the appropriation of a portion of its property pursuant to Highway Law § 30 and the Eminent Domain Procedure Law in a proceeding entitled "Slingerlands Bypass, Part 3, S.H. No. 92 to F.A.S.H. 64-13, Map No. 3, Parcel No. 3."
This claim has not been assigned or submitted to any other Court, tribunal or officer for audit or determination. The claim was filed in the Clerk's office on May 1, 2009 and an amended claim was filed on November 30, 2009.
In January 2006 claimant purchased a 31.77-acre parcel of real property in the Town of Bethlehem, Albany County, known as 1319 New Scotland Road. The parcel was originally purchased in 1997 by Arthur Kontogiannis, father of the majority owner of claimant, KKS Properties, LLC. The property was largely vacant and located on the westerly side of New Scotland Road, a single-lane road in both directions separated by a turning lane. A total of 247 feet of frontage was available on New Scotland Road via two non-contiguous points of access, one approximately 225 feet in width and the other 25 feet. Claimant's appraiser stated that New Scotland Road prior to the appropriation (2005) had an Annual Average Daily Traffic (AADT) volume of 25,300 vehicles.
According to Constantine Kontogiannis, a part owner of KKS who testified on behalf of the claimant, "a pretty extensive network of unpaved driveways" existed on the property which extended to the rear portion of the parcel furthest west of New Scotland Road (T62). Development plans for the subject were submitted to the Town of Bethlehem on behalf of the prior owner on June 28, 1999 (Exhibit 3) and by KKS in December 2005 (Exhibit 5) and April 2006 (Exhibit 6). None of the proposals were approved by the Town. In 2005 the Town of Bethlehem adopted a comprehensive plan which changed the zoning of the subject parcel from Residence A and Residence AA to Hamlet and Commercial Hamlet zoning districts.
Numbers preceded by the letter "T" are taken from the trial transcript.
Claimant's appraiser in his Alternative B Analysis divided the property into two separate economic units which generally equate to the boundaries of the new Hamlet and Commercial Hamlet zoning districts. In this regard the Hamlet zone encompassed 11 acres beginning at the property frontage on New Scotland Road and proceeding west approximately 600 feet. The remaining 20.77 acres lying more than 600 feet west of New Scotland Road were within the Commercial Hamlet zone (Appraisal, Exhibit 13, pp. 47-48).
Against this backdrop the State of New York through the Department of Transportation (DOT) had for several years been preparing plans for the construction of an extension of State Route 85, also known as the Slingerlands Bypass (hereinafter Bypass), a limited access highway intended, in part, to alleviate high traffic and congestion on New Scotland Road (Exhibit 13, p. 11). Uncertainty regarding the project and the precise location of the new roadway had a chilling effect on development for several years prior to the commencement of actual construction. On May 26, 2006, DOT notified the claimant that a map appropriating a portion of its property had been filed in the Albany County Clerk's Office on May 12, 2006. The appropriation encompassed 9.57 acres and bisected the property in a manner similar to the way in which the Hamlet and Commercial Hamlet boundary had previously divided the parcel. The appropriated portion of claimant's property was taken in fee, without access, resulting in two distinct parcels after the appropriation. The first parcel, east of the Bypass, included 3.74 acres and the pre-existing frontage on New Scotland Road. The second, west of the Bypass, is 18.46 acres in size and includes 1,600 feet of frontage along the western edge of the Bypass. Importantly, the description of the property taken in the State's acquisition map (Exhibit 10) included the following reservation:
The appropriated property is described in an acquisition map filed in the Office of the Albany County Clerk on May 12, 2006 (Exhibit 10). The Court adopts the description of the appropriated property as shown on the filed acquisition map. The Court has viewed the property as required by Court of Claims Act § 12 (4) and EDPL § 510 (A).
"RESERVING, however, to the owner of the property abutting Parcel No. 3 on the west, and such owner's successors or assigns, but only to the extent which will not interfere with the use of the property for highway purposes, the right of access to and from the highway, at the PLACE OF ENTRY AND EXIT for purposes on the west side of Slingerlands Bypass, Part 3 S.H. No. 2006-1 with a width of 43 meters along the highway boundary with the centerline of such place of entry and exit [being] 82.351 meters distant northwesterly measured at right angles from Station PC 1+203.276 of said survey baseline" (id. at Map No. 3, Parcel No. 3, Sheet 4 of 5).
In July 2007 claimant submitted a revision to its April 2006 subdivision plan (Exhibit 9). The revised concept plan divided claimant's remaining property into four distinct lots. Proposed Lot #1 encompasses the southernmost two-thirds of claimant's 18.46 acres remaining west of the Slingerlands Bypass. Lot #2 includes the northernmost third of the westerly remainder. Access to Lot #1 would be accomplished through one right-in/right-out and one right-in only point of access and Lot #2 is accessed via a single right-in/right-out access point. Lots #3 and #4 were contained within the portion of claimant's property lying east of the Bypass. The subdivision plan as proposed by the claimant in July 2007 was not approved by the Town of Bethlehem and no further plans for the development of the properties were submitted by the claimant until 2014, when a proposed site plan for the installation of a cell phone tower and attendant building on the property lying west of the Bypass was submitted to the town planning board. The site plan was approved by the board on March 17, 2015 (Exhibits E and F).
The Bypass is a north/south controlled access highway (see Highway Law § 3 [2]) containing two lanes in each direction separated by a grass median. The westerly remainder of claimant's property is situated along the southbound lanes of traffic, 1,700 feet south of a roundabout at Maher Road and immediately north of a roundabout at Vista Boulevard constructed to permit access to the Vista development project undertaken by an adjoining landowner (see Exhibit 12, Tab 10). Originally, claimant intended to utilize the Vista Boulevard roundabout to access the westerly remainder of its property. Had that plan come to fruition, the roundabout would have been constructed at the southwest corner of claimant's property in the same approximate location as the 43-meter access point reserved to the claimant in the acquisition map. After negotiations with the adjoining owner failed to secure an agreement regarding the cost and location of the roundabout, the adjoining owner received town approval of its development plans and DOT issued a highway work permit permitting construction of a roundabout south of claimant's westerly parcel serving only the Vista development. Claimant initiated a CPLR Article 78 proceeding challenging the town's approval of the Vista master plan and DOT's issuance of a highway work permit, arguing that construction of the Slingerlands Bypass and the Vista Boulevard roundabout should be enjoined, as characterized by the Court, "unless full access was given to the petitioner" (Matter of KKS Props., LLC v Town of Bethlehem, et al., Sup Ct, Albany County, Jan. 21, 2008, Devine, J., Index No. 6803/07). In resolving the matter, Supreme Court held the following:
"The court has examined petitioner's claims that DOT has improperly awarded a highway work permit to allow Vista to proceed while denying such permit to the petitioner without cause. Petitioner's arguments are strictly based on where it would prefer the roundabout and complaints asserting that petitioner's property will be landlocked. This Court finds that petitioner's property will not be landlocked. Petitioner may not be currently receiving its preference as to access to the property, but to claim it is landlocked is disingenuous" (id.).
Claimant thereafter moved for summary judgment in the instant action pursuant to CPLR 3212 (g) seeking a determination that the conditional nature of the reservation of the 43-meter access point in the southeast corner of the westerly remainder rendered the entire parcel landlocked. Defendant moved for a determination that the westerly remainder was not landlocked and was served by a 43-meter access point providing legal access to the Bypass. The Court held that claimant was collaterally estopped from re-litigating the issue of whether or not the westerly remainder was landlocked, finding:
"In the instant matter, there seems little question that petitioner argued in Supreme Court that its western property would be landlocked should the highway work permit issued to Vista remain in force and effect. This claim was considered by the Court and flatly rejected. Defendant therefore met its burden of demonstrating that the identical issue was necessarily decided in the prior proceeding, thereby shifting the burden to claimant to establish it lacked a full and fair opportunity to litigate the issue in the prior action. This it failed to do. As a result, claimant is precluded from relitigating the issue of whether or not its western parcel is landlocked" (KKS v State of New York, UID No. 2016-015-116, [Ct Cl, Collins, J., January 28, 2016]).
On appeal the Appellate Division, Third Department, affirmed this Court's determination that collateral estoppel precluded claimant from asserting its westerly remainder was landlocked. The Third Department went further, however, and stated the following in its concluding paragraph:
"Even if we agreed with claimant's contention that collateral estoppel was inapplicable, the record evidence, including the May 2006 acquisition map, demonstrates that claimant's western parcel was not landlocked inasmuch as claimant was reserved a 43-meter wide access point for such parcel (see generally Highway Law § 3 [2])" (Matter of State of New York [KKS Props., LLC],149 AD3d 1317, 1320 [3d Dept 2017]).
At trial claimant argued, consistent with its expert's appraisal report, that the 43-meter access point was unsuitable for development of any commercial, retail or residential uses. In the portion of his report addressing consequential damages arising from the appropriation, claimant's appraiser, Kenneth V. Gardner, concluded "[t]he restrictions of this access fully eliminate the commercial and residential development potential of this acreage. As a result, this remaining 18.46 acres is rendered as surplus acreage with limited marketability and value" (Exhibit 13, p. 65). The restrictions referenced in the report arise from the allegedly "conditional" language used in granting claimant the 43-meter access. In this respect the appraisal report states, as was argued by the claimant at trial, that:
"the rights reserved to the owner provide access only to the extent which it will not interfere with the use of the appropriated area for highway purposes. Under virtually any scenario, the use of this access could be determined to interfere with highway purposes and be prohibited at the sole discretion of the State of New York" (id. at p. 58).
In his testimony at trial the appraiser contended that the claimant's property could have been appropriated in fee, with access. Because the property was taken in fee, without access, Mr. Gardner concluded "they placed a condition on the access, because they want to control the access, at least to some level. The property is not landlocked, but its access is restricted and at the discretion of the State" (T391). From this circumstance he found that access to the westerly remainder "is unsuitable for any economically viable commercial operation" (T392). Mr. Gardner ascribed a value as surplus of $9,500.00 per acre to the entire 18.46 acre westerly remainder after the appropriation.
In addition to the testimony of Messrs. Kontogiannis and Gardner, claimant called a commercial real estate broker, John MacAffer, and an engineer, Ransen Caola, to testify on its behalf. Mr. MacAffer testified that he has listed the westerly remainder property for lease at a price of $37,500.00 per acre since early 2014. Marketing of the property, which continues, is focused on retail users and does not include that portion currently occupied by a cell phone tower. Mr. MacAffer testified that efforts to secure a retail tenant have thus far been unsuccessful, primarily due to the lack of multiple entrances/exits to or from the property, a key requirement of retailers, and the inability of northbound traffic to access the westerly remainder.
Ransen Caola, an engineer, assisted the claimant in preparing various development plans for the subject property. In January 2011 Mr. Caola submitted an engineering report which, among other things, addressed the issue of access to the remainder and its effect on development. With regard to Area #1, the report determined that only 2.713 acres is potentially developable, of 12.090 total acres, and then only with the expenditure of $150,250.00 to address issues concerning vehicular and utility access. According to the report, "[t]he remaining 9.377 acres of Area 1 is undevelopable without an additional NYSDOT easement and incremental cost contribution to support the construction of another right-in/right-out access point" (Exhibit 12, p. 5). Area #1 is separated from Area #2 by a ravine which, according to the report, precludes access from Area #1 and renders "the entire 6.350 acres of Area 2 . . . wholly undevelopable without an additional NYSDOT easement to support the construction of another RIRO access point . . ." (Exhibit 12, p. 7).
As Mr. Caola was aware, however, claimant had previously employed Greenman-Pedersen, Inc. (GPI), described in Mr. Caola's report as "an established regional design and consulting firm with substantial traffic engineering experience" (Exhibit 12, p. 4), to provide an "access evaluation" (Exhibit 12, Tab 10) of the westerly remainder. The purpose of the evaluation was to determine the remainder's suitability for retail and office space development. The GPI report, issued in June 2009, provided what its authors described as "a conservative, worst case development scenario" (Exhibit 12, Tab 10, GPI Report, pp. 1-2) and concluded that a single right-in/right-out driveway "will accommodate 32,000 SF of retail development or 120,000 SF of office space or 13,000 SF of retail and 15,000 SF of office space" (id. at last page). Despite claimant's implications otherwise, Mr. Caola's report does not determine that the 43-meter access point is inadequate to support any commercial development. Rather, the report states:
"A 43m (140') conditional access easement to/from the southernmost portion of southbound lane of the new highway is provided in the NYSDOT appropriation documents. In addition, a narrow (14') curb cut was constructed by NYSDOT during the course of the highway project . . . The existing curb cut is of insufficient width to provide safe access to construction vehicles, and cannot support traffic movements that would result from permissible land development (per Appendix 10)" (emphasis added) (Exhibit 12, p. 4).
The Caola report simply states that the existing 14-foot curb cut impedes or prevents development. It does not reach any conclusion with regard to the effect, if any, of the full 43-meter access on the development of the westerly remainder. This point was made clear in Mr. Caola's testimony at trial (see T248, T250-251, T261).
In fact, Mr. Caola testified as follows with regard to the conclusions of the GPI report on potential development:
"Q. Okay. Now, with respect to the GPI study, the Greenman-Pedersen study, you agree, do you not, that the western portion has not lost all developmental capability after; do you not?
A. Based on the study with a right-in/right-out, I accept that their conclusion of the limits on the various development densities is accurate.
Q. . . . you agree that they could develop the 32,000 square feet of retail with one right-in/right-out access.
A. Yes, ma'am.
Q. . . . or 120,000 square feet of office, correct?
A. Agree, ma'am.
Q. And you also agree that they could develop 13,000 square feet of retail and 15,000 square feet of office.
A. Agree" (T270, T271).
Similarly, John MacAffer, claimant's real estate broker, did not testify that the language of the access had any effect on development of the westerly remainder. Instead, he testified only that the absence of multiple access points and the inability of traffic to access the property from both directions affected the marketability of the property vis-a-vis the retail users the claimant was targeting, stating "very few retailers will go where there's one right-in/right-out only with no access for people coming in the other direction" (T301).
The Applicable Law and Analysis
An owner whose property has been taken by the State through eminent domain is entitled to just compensation (Matter of Town of Islip [Mascioli], 49 NY2d 354 [1980]; US Const, 5th Amdt; NY Const, art. 1, § 7 [a]). Just compensation requires that the State "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], rearg denied 11 NY3d 903 [2009], quoting City of Buffalo v Clement Co., 28 NY2d 241, 258 [1971], rearg denied 29 NY2d 640 [1971]; Rose Park Place, Inc. v State of New York, 120 AD3d 8, 9-10 [4th Dept 2014]). The award "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" (Matter of Eagle Cr. Land Resources, LLC [Woodstone Lake Dev., LLC], 149 AD3d 1324, 1325-26 [3d Dept 2017], lv denied 29 NY3d 916 [2017]; see also Matter of City of New York [Rudnick], 25 NY2d 146, 148-150 [1969]). Where a partial taking of property occurs, "an owner is not only entitled to the value of the land taken - i.e., direct damages - but also to consequential damages, which consist of the diminution in value of the owner's remaining land as a result of the taking or the use of the property taken" (Matter of State of New York [KKS Props., LLC], 119 AD3d 1033, 1034 [3d Dept 2014]). Where a partial taking of land occurs, the measure of damages is "the difference between the property's value before the condemnation and the value afterward" (McDonald v State of New York, 42 NY2d 900, 900 [1977]; Lerner Pavlick Realty v State of New York, 98 AD3d 567, 568 [2d Dept 2012]). The burden of proof is on the claimant to establish consequential damages and to furnish a basis upon which a reasonable estimate of those damages can be made (Matter of Eagle Cr. Land Resources, LLC [Woodstone Lake Dev., LLC], 149 AD3d at 1326).
(a) Value of the Subject Property Before the Taking
Both claimant's and defendant's appraisers agreed that the highest and best use of the subject property before the appropriation was for mixed use development, and both appraisers utilized the sales comparison approach to value the property. Kenneth V. Gardner, claimant's appraiser, evaluated the property utilizing what he denominated as Alternative A and Alternative B approaches. In his Alternative B approach, Mr. Gardner divided the total property into two separate components according to their respective zoning districts, an 11-acre parcel located within the Hamlet zoning district and 20.77 acres within the Commercial Hamlet district. Each component was then compared to sales of similar properties both within and outside the relevant zoning district. Based upon this comparison, Mr. Gardner concluded that the 11 acres of the subject property within the Hamlet zoning district had a value before the appropriation of $136,000 per acre or $1,496,000. Utilizing recent sales not located within the Commercial Hamlet district, Mr. Gardner concluded that the market value of the subject property within the Commercial Hamlet district before the taking was $35,000 per acre or $727,000, rounded. Using this alternative sales comparison, Mr. Gardner concluded that the value of the subject property before the taking was $2,223,000 (see Exhibit 13, p.57).
The Court is unpersuaded that Mr. Gardner's Alternative B valuation is reliable. Of the sales used to value the subject's 11 acres in the Hamlet district, only two were zoned Hamlet at the time of sale. One of the Hamlet-zoned properties was the sale of the subject's 3.74-acre parcel with frontage on New Scotland Road (of which .42 acres was considered surplus). This property sold for $510,000 on November 18, 2013, and Mr. Gardner assessed a positive 15% adjustment for location and a negative 15% adjustment for size. Considering the date of sale of the subject 3.74-acre parcel, seven years after the taking, and the fact it was sold at a premium to an adjoining property owner, the Court accords little weight to this sale. The other Hamlet-zoned property was Mr. Gardner's sale #7, the Kendall Square Apartments property, for which Mr. Gardner found it necessary to assess a positive 30% adjustment for location and a positive 15% for parcel size (Exhibit 13, p. 49). Interestingly, Mr. Gardner also used the Kendall Square Apartments sale in his Alternative A valuation but assessed only a 20% positive adjustment for location before the taking (Exhibit 13, p. 45; T465-466).
None of the three properties used in Mr. Gardner's Alternative B analysis to value the subject's Commercial Hamlet acreage were in the Commercial Hamlet district. The Vista property adjacent to claimant's Commercial Hamlet parcel (Gardner's sale #14) was in a Mixed Economic Development district and Mr. Gardner found it necessary to apply an 80% positive adjustment to the sale price to account for differences in parcel size, frontage/access and topography (id. at p. 57). The Kendall Square development (sale #7), zoned Hamlet, was used in Mr. Gardner's Alternative B analysis to value the acreage in both the Commercial Hamlet and the Hamlet districts. When used to value claimant's Commercial Hamlet parcel, a net negative 55% adjustment was applied to account for differences in frontage/access and topography. When this same sale was used in his valuation of the Hamlet-zoned parcel, Mr. Gardner applied a net positive 45% adjustment to account for differences in location and size (see Exhibit 13, pp. 49, 57). With respect to the location adjustments applied to sales #7 and #21 (Exhibit 13, p. 49), Mr. Gardner applied a positive 30% location adjustment to his sale #7 but only a positive 10% location adjustment to his sale #21 despite the fact that traffic counts for the two parcels were nearly identical (Exhibit 13, p. 49,55; T489-490). Most significantly, the Court does not find his use of sales that were not in either a Hamlet or Commercial Hamlet district a reliable indicator of the value of the claimant's property lying within those districts. In other words, although Mr. Gardner's Alternative B analysis purports to divide the subject into two separate parcels according to their respective zoning districts, the comparable sales used to value the parcels were, largely, not located within the same zoning district as were the subject parcels themselves. While Mr. Gardner drafted a supplemental report to consider defendant's appraiser's sale #23, a Hamlet-zoned parcel (also denominated sale #23 in Mr. Gardner's report) (see Exhibit 14, p. 6), he did so in connection with evaluating the portion of the subject located in a Commercial Hamlet district. In addition, the adjustments made to sales #7, #10, and #14 (Exhibit 13, p. 57), all of which were 50% or more, render them an unreliable indicator of value. The utility of Mr. Gardner's attempt to appraise the subject parcel in accordance with its constituent zoning districts is, therefore, not apparent. For these reasons, the Court will not rely upon Mr. Gardner's Alternative B analysis in reaching its before-taking value.
In his Alternative A analysis, Mr. Gardner relied upon the following sales in determining the subject's value before the taking: (a) sales of commercial development acreage purchased for large retail development in a Planned Commercial district (sales # 10 and #11 [Lowe's and Walmart]); (b) commercial development acreage in a Mixed Economic Development district (sale #14 for development as the Vista Technology campus); (c) multi-family residential development acreage in a Hamlet district (sale #7); (d) Waterfront Mixed Use (sale #19) and (e) Mixed Use Planned Development districts (sale #21). Notably, both defendant's and claimant's appraisers used Kendall Square, purchased for use as an apartment complex in a Hamlet district (claimant's sale number #7, defendant's sale #29) and commercial development acreage used for a Walmart Super Center (claimant's sale #11, defendant's sale #25) in their pre-taking sales comparisons with a difference of opinion regarding appropriate adjustments. After adjusting the properties for location (sales #7, #14, #19, #21), parcel size (sale #11) and pre-sale site approvals (sales #10, #11, #19 and #21), Mr. Gardner concluded that the market value of the subject property's commercial development acreage (23.30 acres) was $92,000 per acre, and the value of the subject property's surplus acreage (8.47 acres) was $9,500 per acre for a total property value before the taking of $2,224,000 (rounded) or $70,003 per acre (see Exhibit 13, p. 47).
The Court is unpersuaded that sales #19 and #21 are comparable to the subject property. Both are high density residential developments located outside the Town of Bethlehem, and Mr. Gardner was unaware of the density allowances permissible in those areas (T470). Notably, both appraisers agreed that claimant's Commercial Hamlet acreage is limited to eight residential units per acre without special approval from the Town (T472; 801-803). Moreover, sale #19 is waterfront property overlooking Peebles Island State Park. Finally, unlike the subject, both sales #19 and #21 were purchased with approvals in place for the development of residential apartments.
Sale #14 is the Vista property. It consisted of 82.51 acres and sold for $1,500,000 or $18,180 per acre. By approximating the cost to build the roundabout and bring utilities from New Scotland Road at $1,000,000, which was added to the purchase price, and then allocating 57.51 acres to surplus, Mr. Gardner concluded that sale #14 had an adjusted price per acre of $92,000. In the Court's view, Mr. Gardner's inclusion of costs to build the roundabout and extend the utilities, and his exclusion of surplus land, renders this adjusted per acre valuation of little probative value. It does not appear that the quantification of surplus land was personally known to Mr. Gardner and no facts were adduced to support his opinion that 57.51 acres constituted surplus land (see Cassano v Hagstrom, 5 NY2d 643 [1959], rearg denied 6 NY2d 882 [1959]). Sale #14 will therefore not be considered in determining the before-value of the property.
Both claimant and defendant used the sales denominated in Mr. Gardner's appraisal as his sales #7 and #11 (defendant's sales #29 and #25, respectively) to arrive at their before-taking value, albeit with differing adjustments. Sale #7 is within a Hamlet zoning district and was purchased for the development of Kendall Square Apartments. Mr. Gardner applied a net positive 20% adjustment to account for differences in location, whereas Mr. Thurston applied a net negative 45% adjustment to account for differences in size, access, shape and constrained land (see Exhibit 13, p. 45; Exhibit A, p. 47). The Court finds that Mr. Gardner's sale #7 (Mr. Thurston's sale #29) is comparable to the subject with a positive adjustment of 15% to account for the subject's superior location (the subject had almost double the traffic count on the date of the taking) and adjustments of negative 10% to account for differences in size (the subject being substantially larger), negative 15% to account for the subject's inferior amount of frontage, negative 15% to account for the subjects inferior shape, and negative 5% to account for the subject's larger percentage of constrained land.
Mr. Gardner's sale #11 is Mr. Thurston's sale #25, a sale of commercial acreage for the development of a Walmart in the Town Center development. Of the 75.7 acres included in this sale, Mr. Gardner valued 20.7 acres as surplus, applied a positive 10% adjustment to account for differences in parcel size, and a negative 15% adjustment for approvals in place at the time of sale. As with Mr. Gardner's sale #14, however, his allocation of surplus acreage is wholly unsupported (see Cassano v Hagstrom, supra). The Court finds that while this sale is comparable to the subject, adjustments should be made to account only for differences in site size (+10%), frontage/access (-10%), shape (-10%) and steep slopes (-10%), without allocation for surplus property. The location of the subject and sale #11 being comparable, no adjustment on account of location is made.
Mr. Gardner's sale #10 is part of the Bethlehem Town Center Development. Inasmuch as 40% of this property was purchased for use as open space together with the development of a previously purchased parcel (Gardner's sale #11), the Court does not find it is a reliable indicator of market value on the date of the taking.
Mr. Thurston performed his sales comparison analysis utilizing four Bethlehem parcels, two of which were zoned Hamlet and two nearby commercial sites (Exhibit A, p. 47). Thurston's sale #23 consists of 14.72 acres in a Hamlet-zoned district and was proposed for the development of senior apartments. This parcel has a similar shape to the subject with the majority of the land to the rear of the parcel, and a similar amount of constrained land. The Court agrees with Mr. Thurston's assessment of a negative 10% adjustment for size as sale #23 was less than half the size of the subject. With respect to location, the traffic count on Glenmont Road where sale #23 is located is approximately one-fourth that of the subject on New Scotland Road on the date of the taking, and the Court will therefore apply a positive 20% adjustment to account for the subject's superior location (compare Exhibit 14, sale #23 traffic count on p. 6 to Exhibit 13, traffic count of subject, p. 45).
Mr. Thurston's sales #25 and #29 are the same as Mr. Gardner's sales #11 and #7, respectively, and were discussed previously.
Mr. Thurston's sale #28, which he erroneously identified as sale #26 in his site valuation chart (T655), represents the property immediately north and west of the Walmart property and includes 17.437 acres of commercially-zoned land and 39.84 acres zoned residential. Mr. Thurston indicates in his report that the residentially-zoned land, which featured steep slopes and was separated from the commercial property by an electric transmission line, was donated to the Mohawk Hudson Land Conservancy. While the Court finds Mr. Thurston's adjustments of negative 5% for the comparable sale's superior frontage, negative 5% for the comparable sale's superior shape, and a negative 10% for the differences in size are appropriate, his negative 10% adjustment for location is not. In the Court's view, the locations of sale #28 and the subject were comparable on the date of the taking and adjustment was unnecessary. In addition, the Court finds a positive 5% adjustment is warranted for differences in the quantity of constrained land.
Traffic counts on Route 9W and New Scotland Road were similar on the date of the taking (see Exhibit 13, p. 45 for traffic counts on New Scotland Road and Route 9W).
Before applying adjustments for location, size, frontage/access, shape and constrained land, Mr. Thurston determined each comparable sale's adjusted sale price by accounting for impending expenditures/improvements and price trends. Mr. Thurston's adjustment for impending expenditures was based on Mr. Caola's estimate of $20,000 to remove the structure on the subject property and the acreage of the comparable sales that did not have a structure to remove. The Court agrees that the cost to raze the structure on the subject property ($20,000) should be divided by the number of acres comprising each comparable sale (none of them had a structure to be removed) which is then appropriately deducted from the comparable property's per-acre sale price (see Exhibit A, p. 48 "Impending Expenditures/Improvements").
The Court is also in agreement with Mr. Thurston's application of a 2% adjustment per year in the sale price per acre of the comparable sales from the sale date to the date of the taking (T660-661). This adjustment would be a negative one for sales occurring after the date of the taking and a positive one for sales occurring before the taking.
With respect to Mr. Thurston's sales #23, #25 (claimant's sale #11), #28 and #29 (claimant's sale #7), after adjusting the sale price per acre for impending expenditures and price trends, the Court finds the adjusted sale prices per acre (after adjustments for impending expenditures and price trends) of $36,725; $78,046; $66,273 and $71,698 respectively are fair and reasonable. After further adjustments, as previously recounted, for location, size, frontage/access, shape, and constrained land, the Court finds reconciled sales prices per acre in the amounts of $40,398; $62,437; $56,332; and $50,189, respectively. These reconciled sale prices were calculated by applying the net adjustments to the adjusted sales prices per acre for each parcel. With respect to sale #23, net adjustments of positive 10% were applied to the adjusted price per acre of $36,725 to arrive at the reconciled sale price per acre of $40,398. With respect to sale #25 (claimant's sale #11), net adjustments of negative 20% were applied to the adjusted price per acre of $78,046 to arrive at an adjusted price per acre of $62,437. With respect to sale #28, net adjustments of negative 15% were applied to the adjusted sale price per acre of $66,273 to arrive at a reconciled sale price per acre of $56,332. With respect to sale #29 (claimant's sale #7), net adjustments of negative 30% were applied to the adjusted sale price per acre of $71,698 to arrive at reconciled sale price per acre of $50,189. The mean price per acre of the above-stated comparable sales was $52,339 ($209,356 divided by 4= $52,339). Multiplying that by the total number of acres that comprised the subject (31.77), the Court concludes that the total value of the subject property before the taking was $1,662,810.
(b) The Easterly Remainder
In valuing the easterly remainder after the taking, both claimant and defendant relied, in part, upon the sale of the subject's easterly parcel in July 2013. This parcel, denominated as Thurston's sale #39 and Gardner's sale #4, consisted of 3.736 acres and sold for $510,000. After applying a negative 13% adjustment to account for the date of sale, Mr. Thurston determined the adjusted sale price per acre of his sale #39 was $118,764. The Court finds this reasonable. While this property was sold at a premium to an adjoining property owner nearly seven years after the taking, being the subject of the instant evaluation it nevertheless provides some guidance with respect to the market value of the easterly remainder after the taking.
Consideration of the remaining sales utilized by both Messrs. Thurston and Gardner in valuing the easterly remainder after the taking leads the Court to conclude that, in addition to the sale of the subject's easterly remainder, Mr. Thurston's sales #33 and #34, and Mr. Gardner's sale #3 are sufficiently similar to the subject to provide an estimate of the market value on the date of the taking. Sale #33 has an adjusted price per acre of $118,056 and the Court finds adjustments to account for differences in site size (-10%), access (-10%), shape (-5%) and constrained land (-5%) are appropriate for a reconciled sale price per acre of $82,639. Sale #34 has an adjusted price per acre of $115,616 and the Court finds a single adjustment to account for the difference in shape (-5%) is appropriate for a reconciled sale price per acre of $109,835. Mr. Gardner's sale #3 (id.) has an adjusted price per acre of $158,275 and the Court finds an adjustment to account for the difference in location (-15%) is appropriate for a reconciled sale price per acre of $134,534. Although this sale is located on New Scotland Road, it had nearly double the traffic count of the subject on the date of its sale. The mean price per acre of the above-stated comparable sales was $111,443 ($445,772 divided by 4=$111,443). Multiplying that by the total number of acres that comprised the easterly remainder (3.736), the total value of the easterly remainder after the taking was $416,351.
The property was sold one year before the subject taking and Mr. Thurston's 2% positive adjustment to the price per acre ($115,741) was therefore appropriate. Thurston's sale #33 also had a structure in need of razing so no adjustment for impending expenditure or improvements was made.
The subject had 66 feet of road frontage per acre whereas sale #33 had 130 feet of frontage per acre (see Exhibit A, p. 69).
Sale #34 also had a structure to be razed and the sale occurred less than six months after the taking. Adjustments for impending expenditures and price trends were therefore unnecessary.
Sale #3 occurred approximately one year before the subject taking. The sale price of $155,172 was therefore adjusted by a positive 2% to account for the 2% annual price trend.
(c) The Westerly Remainder
Claimant contends that a single right-in, right-out access point renders the property unsuitable for development of any kind, whereas defendant contends that although office/retail use is not financially feasible, the property remains suitable for multi-family residential development. Claimant's contention that the reserved access to the western parcel is unsuitable for any kind of development rests entirely on Mr. Caola's opinion that "the existing curb cut . . . cannot support traffic movements that would result from permissible land development" (Exhibit 12, p. 4). Even accepting this statement as true, however, no explanation appears in the record as to why the 43-meter conditional access (as distinct from the existing curb cut) could not be developed for use as a point of ingress and egress. Mr. Thurston testified that numerous multi-family residential developments utilize only a single access point. While it does not appear that any of those properties were on a controlled access highway which permitted only right-in, right-out movement, the Court does not find that this fact alone rendered the subject premises unsuitable for development of any kind.
Although residential subdivisions are prohibited in a Commercial Hamlet district (see Exhibit D), development for multi-family use is permitted (see Exhibit C).
The law is settled that owners of commercial property do not have a right of direct access from every point along the highway. Rather, "[r]ight of access means reasonable ingress to and egress from abutting land to a system of public highways, subject to reasonable traffic regulation" (Tucci v State of New York, 28 AD2d 774 [3rd Dept 1967], affd 29 NY2d 836 [1971]; see also Lake George Assoc. v State of New York, 7 NY3d 475, 480 [2006]). Consequential damages are not recoverable where, as a result of the taking, access to an owner's property is merely made more inconvenient or circuitous (Selig v State of New York, 10 NY2d 34, 39 [1961]; cf. Priestly v State of New York, 23 NY2d 152 [1968]; Red Apple Rest. v State of New York, 27 AD2d 417 [3d Dept 1967]). As set forth by the Appellate Division, Third Department, in Knickerbocker Dev. Corp. v State of New York (140 AD3d 1444, 1445-1446 [3d Dept 2016], lv denied 28 NY3d 905 [2016]), the central question is whether the access remaining is suitable to the highest and best use of the property:
"Consequential damages may be recovered where defendant's appropriation has caused access to the remainder of a property to become 'unsuitable,' that is, 'inadequate to the access needs inherent in the highest and best use of the property involved' (Priestly v State of New York, 23 NY2d 152, 155-156 [1968]; see Lake George Assoc. v State of New York, 23 AD3d 737, 738 [2005], affd 7 NY3d 475 [2006]). Access may be rendered unsuitable if the taking of frontage on a property abutting a highway or 'the physical construction of [an] improvement itself, so impairs access to the remaining property that it can no longer sustain its previous highest and best use' (La Briola v State of New York, 36 NY2d 328, 332 [1975]; see Matter of Metropolitan Transp. Auth. [Washed Aggregate Resources, Inc.], 102 AD3d 787, 793 [2013], appeal dismissed 21 NY3d 938 [2013], lv denied 22 NY3d 858 [2013]). '[T]he question of suitability is a factual one directly related to the highest and best use of the property' (Priestly v State of New York, 23 NY2d at 156)."
Here, the Court agrees with Mr. Thurston's assessment that while the westerly remainder may not be suitable for office or retail development because of the single point of ingress and egress, it is suitable for multi-family residential development (T693-696; Exhibit A, pp. 60-61; 68). Mr. Thurston explained that it would be an underutilization of the western remainder to develop 32,000 square feet of retail or 28,000 square feet of combined retail and office space as the GPI report indicated was possible (T693-697). Rather, the western parcel would be better utilized by developing 91 to 92 residential units on Site 1 with the land comprising Site 2 used to fulfill the open space requirements of the Town (T696-697; Exhibit A, p. 61).
Thurston's sales #21, #22 and #23 were purchased for high density residential development and are sufficiently similar to the western parcel to provide an estimate of its market value on the date of the taking (see Exhibit A, p. 72). All of these comparable sales had either limited frontage or frontage obstructed by wetlands with only a single access point. Thurston's sale #29, however, has multiple curb cuts and a commercial component which Mr. Thurston found necessary to factor out (T698-699). The Court does not find Thurston's sale #29 sufficiently similar to the claimant's western remainder and will, therefore, rely only upon sales #21, #22, and #23 in determining the value of the western parcel after the taking.
While all of these sales had only a single access, none of them were limited to a right-in/right-out. The Court has therefore added a negative 20% adjustment to each sale to account for the subject's inferior access. Sale #21 has an adjusted sale price per acre of $34,764 and the Court finds adjustments to account for differences in size (-5%), access (-20%), and zoning (+10%) are appropriate for a reconciled sale price per acre of $29,549. Sale #22 has an adjusted price per acre of $20,677 and the Court finds that only a single adjustment to account for differences in access (-20%) is appropriate for a reconciled sale price per acre of $16,542. In the Court's view, none of Thurston's adjustments to account for differences in location, size or the shape of sale #22 were necessary. Sale #23 has an adjusted price per acre of $38,111 and the Court finds that adjustments to account for differences in access (-20%) and shape (+15%) were necessary for a reconciled sale price per acre of $36,205. The mean price per acre of the above-stated comparable sales was $27,432 ($82,296 divided by 3=$27,432). Multiplying that by the total number of acres comprising the westerly remainder (18.464), the total value of the westerly remainder after the taking is $506,504.
The adjusted sale price per acre of $35,473 was further adjusted by -2% to account for price trends based upon the date of sale.
The sale price per acre of $22,233 was adjusted by -7% to account for price trends based upon the date of sale.
The sale price per acre of $37,364 was adjusted by +2% to account for price trends based upon the date of sale.
Based on the forgoing, damages are computed as follows:
Direct Damages
9.57 (acres appropriated) X $52,339 (before-taking value per acre) = $500,884 (rounded).
Consequential Damages
Western Remainder
Value of the westerly remainder before the taking:
18.464 (acres) X $52,339 (reconciled sale price per acre before the taking) = $966,387 (rounded).
Value of the westerly remainder after the taking:
18.464 (acres) X $27,432 (reconciled sale price per acre after the taking) = $506,504 (rounded).
Consequential damages to western remainder:
$966,387 (before-taking value) less $506,504 (after-taking value) =
$459,883.
Eastern Remainder
Value of the easterly remainder before the taking:
3.736 (acres) X $52,339 (reconciled sale price per acre) = $195,539 (rounded).
Value of the easterly remainder after the taking:
3.736 (acres) X $111,443 (reconciled sale price per acre) = $416,351 (rounded).
Consequential damages to the eastern remainder:
$195,539 - $416,351 = $-220,812.
Total Consequential Damages
Total consequential damages:
$459,883 (consequential damages to the western remainder) + $-220,812 (total increase in value to the eastern remainder) = $239,071
Subtotal of Damages
Direct damages= $500,884
Consequential Damages= $239,071
Subtotal Damages = $739,955.
Claimant is also awarded $5,000 for the cost to move the fire hydrant and signs located within the 43-meter access point in accordance with Mr. Caola's estimated cost to remove these obstructions. No award is made for the costs to move the utilities, however, as these costs would have been necessarily incurred in order to develop the property even in the absence of the appropriation.
Total damages awarded are therefore $744,955 with statutory interest from May 12, 2006 to the date of this decision, and thereafter to the date of entry of judgment.
As there is no evidence in the record establishing a date of personal service of the notice of appropriation, prejudgment interest shall not be suspended pursuant to EDPL § 514 (B) (Sokol v State of New York, 272 AD2d 604 [2d Dept 2000]).
All motions on which the Court may have previously reserved decision or which were not previously decided are hereby denied.
To the extent claimant has paid a filing fee, it may be recovered pursuant to Court of Claims Act section 11-a(2).
The award to claimant herein is exclusive of the claims, if any, of persons other than the owners of the appropriated property, their tenants, mortgagees or lienors having any right or interest in any stream, lake, drainage, 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.
Let Judgment be entered accordingly.
July 25, 2018
Saratoga Springs, New York
FRANCIS T. COLLINS
Judge of the Court of Claims