Opinion
# 2015-015-604 Claim No. 123499
02-23-2016
A-1 AUTO PARTS, INC. v. THE STATE OF NEW YORK
Biersdorf & Associates, P.A. By: Dan Biersdorf, Esquire Honorable Eric T. Schneiderman, Attorney General By: Audrey Alexander, Esquire Assistant Attorney General
Synopsis
Damages assessed following trial of claim filed pursuant to Highway Law § 30 and the EDPL.
Case information
| UID: | 2015-015-604 |
| Claimant(s): | A-1 AUTO PARTS, INC. |
| Claimant short name: | A-1 AUTO |
| Footnote (claimant name) : | The caption was amended pursuant to a So Ordered stipulation of the parties dated February 4, 2016. |
| Defendant(s): | THE STATE OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 123499 |
| Motion number(s): | |
| Cross-motion number(s): | |
| Judge: | FRANCIS T. COLLINS |
| Claimant's attorney: | Biersdorf & Associates, P.A. By: Dan Biersdorf, Esquire |
| Defendant's attorney: | Honorable Eric T. Schneiderman, Attorney General By: Audrey Alexander, Esquire Assistant Attorney General |
| Third-party defendant's attorney: | |
| Signature date: | February 23, 2016 |
| City: | Saratoga Springs |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
In this action pursuant to Highway Law § 30 and the Eminent Domain Procedure Law, claimant seeks damages for just compensation arising from the closure of a bridge on November 27, 2010 and subsequent filing of certified acquisition maps on June 6, 2011.
The appropriation maps (Exhibits E and F) and descriptions contained therein are adopted by the Court and incorporated by reference.
The first witness called at trial, the claimant's commercial real estate appraiser, Kevin L. Bruckner, testified that he first inspected the subject property on June 10, 2014. Mr. Bruckner's real estate appraisal of the subject was received in evidence as Exhibit 1.
Exhibit 1 describes the subject property as an automotive salvage yard containing a total of 13.14 plus or minus acres and composed of two separate tax parcels, one of 1.50 plus or minus acres and the other of 11.64 plus or minus acres. According to Mr. Bruckner, the closing of a bridge on November 27, 2010 prevented all access to the two parcels, both of which were located on Barnes Avenue in the Town of Marcy, New York. The date of the actual taking and the valuation date utilized by Mr. Bruckner was June 6, 2011. The witness described the subject property as an active automotive salvage yard composed of two separate parcels but considered one economic unit of 13.14 acres for purposes of his appraisal. The subject was improved by a 2,820 square-foot building which included 1,380 square feet of warehouse space and 1,440 square feet utilized as a garage building and small office. In addition, an eight-foot-high wooden fence was constructed along the entire length of the property which bordered Barnes Avenue.
Mr. Bruckner testified that the buildings had been demolished prior to his inspection of the property on June 10, 2014 as the State had previously taken a temporary easement to permit it to enter and remove the buildings. The witness testified that the concrete pad which underlaid the buildings was still visible and that he interviewed the property's owner, Mr. Sal Viti, who explained the overall construction of the buildings, which were first built in the 1940s. In addition, he was able to view the buildings through historical photographs depicting the former buildings and fencing (Exhibit 1, pp. 28-29). He further explained that the subject was encumbered by a fifty-foot-wide access easement which ran through the property from Barnes Road to a wetlands recreational area owned by the State of New York. This easement was referred to at trial as Schuyler Road.
Mr. Bruckner testified that he was able to access all areas of the site during his inspection. He further testified that according to the owner, Mr. Viti, the southern portion of the site, that south of Schuyler Road, was used to store vehicles and conduct other operations of the auto salvage business. The property owner, Mr. Viti, stated that he utilized the northern portion of the site for storing miscellaneous parts and scrap metal until it could be salvaged, recycled or sold. He described the area north of Schuyler Road as containing trees and scrub brush while the southern portion was generally open. Mr. Bruckner testified that he entered the trees and brush area in the northern portion of the parcel with Mr. Viti and was able to observe that "there [was] still some of this scrap metal and old rusted parts that I observed still on the ground" (Tr. 30).
"Tr." refers to pages of the trial transcript.
The witness testified that use of the property as an auto salvage business was a preexisting legal use, and continued to be a legal use until the date of the valuation, June 6, 2011. He acknowledged, however, that access to the property was prevented when the bridge was closed in November 2010 and that the owner was thereafter unable to use the property for his auto salvage business "because you couldn't gain access to it by vehicle" (Tr. 31). He stated his opinion that the highest and best use of the subject property was as an auto salvage operation. He described the preexisting use of the property as an auto salvage operation as "extremely valuable" (Tr. 33) in that approvals for such a business are difficult to obtain because "municipalities don't like auto salvage uses" (Tr. 33). According to Mr. Bruckner "when you have an existing auto salvage use, which is legally permissible, it has significant value" (Tr. 34). As a result, he did not value the site as vacant. Instead, he valued the property "with the auto salvage use as the real property, and then I added in the contributory value of the building improvements" (Tr. 34). He described his methodology as a combination of the sales comparison and cost approach to property valuation.
With regard to comparable sales, Mr. Bruckner testified that he identified approximately 120 transfers of junk yards, scrap dealerships and salvage facilities within the State of New York since 2000. Most were not utilized in his analysis because he determined the transfers were not arms-length transactions. Other sales were not considered because they were based upon an allocated price which Mr. Bruckner testified, in his experience, are primarily dependent upon the income tax considerations of the seller. Ultimately, his analysis identified four comparable sales of ongoing salvage concerns, not including the value of inventory or personal property. Sale number 1 is located in Wawarsing, New York, Ulster County. Sale numbers 2 and 3 are located in the Buffalo area and sale number 4 is located in Manlius, New York, Onondaga County. It was his belief that the four properties selected were comparable to the subject stating that all of the properties were in "more or less densely populated areas" (Tr. 40). He noted that the subject property, while located in the Town of Marcy, was "right on the border to the City of Utica" (id.), and that population and population density are key factors in the demand for auto salvage services. A higher number of low income consumers in urban areas also contributes to the successful operation of an auto salvage yard. Such facilities are generally located in isolated areas adjacent to urban communities and close to auto dealerships and auto repair facilities. In this regard he noted that Barnes Avenue was the site of several competing auto salvage facilities and that nearby Oriskany Boulevard hosts a number of auto repair and auto dealership businesses. The above factors led the witness to conclude that the subject parcel was "an excellent location for an auto salvage facility" (Tr. 44).
Referencing the sales comparison grid on page 44 of Exhibit 1, the witness testified that the properties selected were adjusted based upon property rights, financing, sales conditions and the date of sale. He noted that sales 1 and 3 were financed by the seller and, as a result, those properties received a negative adjustment in recognition of the difficulty of obtaining financing for the sale of auto salvage yards. He also noted that sales 1 through 3 occurred between 2008 and 2014, a time frame which coincided with the taking date of June 2011. Sale number 4, which occurred in September 2005, received a positive adjustment in recognition of the increase in market values which occurred between 2005 and 2008. After applying appropriate adjustments, Mr. Bruckner arrived at a "time adjusted normal price" and then proceeded to estimate "the contribution value of the building improvements for each one of the sales" (Tr. 47). Since the buildings are similar in condition and type of construction, the witness determined the estimated contribution value of the buildings by multiplying the total square footage of each by a unit value. The amount determined was deducted from the time adjusted normal price which, according to the witness, allowed us "to get to the line that says, the sale price as unimproved land with a salvage yard permit" (Tr. 47-48). The unit values selected, $15 per square foot of building area and $5.00 per linear foot of fencing, were applied consistently to all properties in light of their similar construction and condition.
Mr. Bruckner testified that by determining the value of buildings and fencing at each of the properties pursuant to the above analysis, he determined "the pure land value with the permit for the use as an auto salvage facility" (Tr. 49). Further deductions were applied to each property for location, economies of scale, zoning, shape and topography, utilities and other features. After applying adjustments, where appropriate, to each property, the witness determined a final adjusted sale price for each which he then divided by each individual parcel's total acreage to determine a sale price per acre. The adjusted price per acre for sale number 1 was $36,613, for sale number 2 $36,431, for sale number 3 the adjusted price was $25,399, and for sale number 4 the adjusted price was $26,868 per acre. He identified sale number 2 as the most comparable sale in that it was similar in size to the subject, the building improvements were comparable and similar in size and condition, and it had transferred within six months of the valuation date of the subject property. In addition, sale number 2 was located in the town of Hamburg, near the City of Buffalo, and was comparable in terms of population, population density and proximity to an urban area. Having determined that the adjusted sale price of sale number 2 was $36,431, the witness applied a per acre value of $36,000 to the subject and multiplied that value by the total acreage of 13.14 acres, to arrive at a land value, as a salvage yard facility, of $473,040. To complete his analysis the witness determined the contributory value of the improvements to the subject property by determining the cost as new and depreciating the improvements to arrive at a depreciated value. An 85% depreciation percentage was applied to the building improvements, an 80% depreciation percentage was applied to the wood fencing on the property and the total contributory value of the improvements was rounded to a total of $50,000. This amount, when added to the $473,040 land value previously determined, resulted in a total market value of $523,040.
On cross-examination Mr. Bruckner testified that an appraiser assistant, Lindsay Macaluso, assisted him in inspecting the property and preparing the analysis contained in Exhibit 1. Notwithstanding that the certification of Ms. Macaluso states that she "developed the analysis and prepared the written report under the direct supervision of the Supervising Appraiser, Kevin L. Bruckner", Mr. Bruckner testified "[t]his is my analysis, these are my conclusions, and this is my appraisal report" (Exhibit 1, p. 3; Tr. 66). He was then asked regarding a statement contained on p. 26 of Exhibit 1 that "both parcels comprise wetlands, due to their close proximity to the Mohawk River." He stated that the existence of wetlands was not a consideration in valuing the subject property because use of the property as an auto salvage facility was a legal use which preexisted the regulations governing use of the wetlands. He further explained that his conclusion that the entire subject property was being used as part of an auto salvage business resulted from his interview with the owner, Mr. Viti, as well as his visual inspection of the property during which he observed rusted car parts, particularly on the northern portion of the site. He further testified that he included the area of Schuyler Road, which bisected the site, in his calculations of the property's total acreage because the access easement did not prevent its use by the owner and merely prohibited blocking of the access route to the property. While he acknowledged a third party, in addition to the State of New York, also held a permanent easement in Schuyler Road to provide access to the rear portion of the property, he did not make any adjustments to the total area of the subject property because in his view it was irrelevant in that "the owner still owned the land" (Tr. 74).
The witness testified that the zoning ordinance for the Town of Marcy (Exhibit Z) authorizes eleven discrete categories of uses within a floodplain district and does not specifically permit auto salvage facility uses as a matter of right. Such a use is, however, a permitted use where it pre-dates adoption of the zoning ordinance (Exhibit Z, p. 34, item 12). He stated that he believed the subject property was a legally permitted preexisting use as a result of conversations with the owner, Mr. Viti, and town officials, that he had been informed by Mr. Viti that he possessed a conditional use permit for operation of an auto salvage facility and the town verified that information. Mr. Bruckner then reviewed Exhibit W, a license granted by the Town of Marcy to A-1 Auto Parts authorizing operation of an automobile junkyard between April 1, 2010 and April 1, 2011. He agreed that the license is subject to two conditions, that the property be surrounded by an enclosure at least eight feet in height and that all vehicles be contained within the screened area. Additional temporary conditions including the removal of wood debris and tires from the property were required to be met within 90 days of July 2, 2010.
Turning to the comparable sales identified by the witness and the adjustments made thereto, Mr. Bruckner testified that he included a 10% adjustment for sale number 2 because the permit issued the buyers contained certain conditions which required them to incur costs to remove tires on the site, install a screen wall and a landscape buffer. He acknowledged that sale number 2, located in Hamburg, New York, was located in an area with substantial retail and commercial development. He also agreed that sale number 2 is in a high traffic and high visibility location, but stated "[y]ou don't need high visibility for an auto salvage use. It's not that type of use" (Tr. 103). Sale number 3 is located on Bailey Avenue in the City of Buffalo in an area containing a combination of industrial uses. He agreed that sale number 3 is also a high traffic, high visibility location. Sale number 4 is located in Manlius and within the Syracuse metropolitan area. It, like sale number 3, is adjacent to Interstate 90. He acknowledged that Barnes Avenue is a dead-end street but testified that the subject property is located close to Oriskany Boulevard, which he described as "a major commercial thoroughfare" (Tr. 112-113). Although Barnes Avenue is a secondary road and certain of the comparable sales are located in high visibility, high traffic locations, they are similar locations for an auto salvage use. In fact, as it concerns operation of an auto salvage facility, a secondary road location is in some respects more desirable.
Mr. Bruckner explained that the 15% positive adjustment made to sale number 3 located on Bailey Avenue in the City of Buffalo was appropriate because it was located in a mixed residential and industrial neighborhood in which residential dwellings actually abutted the property. He cited the potential future difficulty in obtaining permits and the possibility of residential complaints resulting from operation of the auto salvage facility. With regard to sale number 4 located in Manlius, New York, he stated that although the property was within the Syracuse metropolitan area it was not adjacent to the City of Syracuse, as the subject is adjacent to the City of Utica, and was therefore considered to be slightly inferior. The witness testified that he applied a positive 10% location adjustment to sale number 1, located on Woodys Lane in the Town of Wawarsing, because of its more rural setting. He acknowledged that the Town of Wawarsing is not a highly populated area and both parties agreed that the population of the City of Utica is approximately 62,000 people while Wawarsing's population is 13,159. The parties further agreed that the population density of the City of Utica in April 2010 was 3,713.5 persons per square mile with a total area of 16.76 square miles. In Wawarsing the population per square mile was 100.8 and the total land area 130.51 square miles.
Mr. Bruckner testified that he first identified comparable sales of property used for auto salvage purposes and then subtracted the value of buildings on those properties at a rate of $15 per square foot to arrive at an unadjusted sale price for the value of the land transferred. In explaining the use of a $15 a square foot adjustment for building space the witness testified "our subject buildings are worth about $15 a square foot. The comparable buildings were similar in age, construction, finish, condition, etc., so we used the same $15 a square foot to be consistent" (Tr. 150). A separate adjustment was made for the value of fencing for both the subject and comparable sale number 4. He stated his opinion that in appraising properties utilized for auto salvage purposes "the majority of value is in the land and the special permit" (Tr. 157).
On redirect examination Mr. Bruckner reiterated that the owner of the subject property was not prohibited from using the easement known as Schuyler Road in conducting their auto salvage enterprise stating "you can't block it, but they could use that land" (Tr. 163). He stated that high traffic counts and high visibility are not necessary attributes of property utilized for auto salvage purposes and that each of the comparable sales were existing auto salvage businesses which were intended to continue following consummation of the sale. Auto salvage facilities do, however, require a high population density and proximity to auto dealership and auto service facilities which utilize their products. In his view the subject property was an excellent location for an auto salvage facility given its proximity to Oriskany Boulevard and its location adjacent to the City of Utica. He noted that it is primarily small auto repair facilities that rely upon auto salvage yards for parts and "there's a lot of those types of facilities in and around Utica, but especially along Oriskany Boulevard" (Tr. 168).
On re-cross-examination the witness recalled that "there may have been some dilapidated fencing" (Tr. 174) along the northern edge of Schuyler Road. It was his contention, however, that the fencing did not prohibit the owner's use of the northern portion of the property "because there was openings in the fence" (Tr. 175).
The state moved to strike the claimant's appraisal. The Court reserved on the motion.
The claimant closed its proof at the conclusion of Mr. Bruckner's testimony and the defendant called Barbara Beall, a Certified Professional Wetlands Scientist, as its first witness. Ms. Beall is employed as the Director of Natural Resources Services at Chazen Companies and was requested by the New York State Department of Transportation (NYSDOT) "to look at the wetlands and the floodplains on that property [the subject], discuss their regulatory impacts on development of that property, and form an opinion about how that might impact developability of the property" (Tr. 193). The witness identified Exhibit B as a wetland delineation survey, floodplain and floodway information report regarding the property located at 67 Barnes Avenue in the Town of Marcy, New York dated November 3, 2014.
The parties agreed at trial that wetland A identified in the report as containing 1.8 acres is actually .18 acres in size.
Ms. Beall described wetlands as areas in which the presence of water has removed oxygen from the soil and plants adapted to oxygen-poor soil predominate. Three factors are examined to determine the existence and outline of a wetland: the presence of water in the soil, soil which is consequently oxygen poor, and, as stated above, vegetation which can survive in oxygen-poor soils. Ms. Beall testified that she used these factors to identify wetlands on the subject property and placed flags in those areas where it was concluded wetlands existed. Thereafter, Chazen Company surveyors visited the property and plotted the latitude and longitude of the flags outlining the wetlands. The location plots were then incorporated into an overall survey of the property. Ms. Beall stated that she was at the 67 Barnes Road property on June 5, 2014 and Chazen Company surveyors were onsite on both June 5 and June 6, 2014. The map showing the location of wetlands identified on the subject property was included as attachment 3 of the wetland delineation and floodway information report (Exhibit C). Wetland XW is a 2.2 acre parcel located on the north side of Schuyler Road. Miss Beall testified that wetland XW is classified by the Department of Environmental Conservation (DEC) as a Class II wetland, which she described as "a wetland that has very important functions, but doesn't quite reach the level of a Class 1 wetland" (Tr. 206). Also identified in the report is a 100-foot buffer area that surrounds wetland XW which Ms. Beall identified as "an adjacent area" within which DEC would regulate activities relative to their impact upon the wetlands to which the buffer area relates. The report also identifies three wetlands depicted in green which the witness believes would be regulated by the United States Army Corp of Engineers including wetland Z (.11 acres), wetland Y (.23 acres) and wetland T (.04 acres). Finally, the report (Attachment 3) indicates the existence of two small DEC regulated wetland areas south of Schuyler Road and their attendant adjacent areas. In all, Ms. Beall determined that the total area of the subject property identified as "subject to wetland jurisdiction" was 7.02 acres which includes both wetlands regulated by the Army Corp of Engineers and a 100-foot adjacent area regulated by the Department of Environmental Conservation.
Ms. Beall testified that although the owners of the subject property could not erect a building or structure in the identified wetland areas, the question of whether they could place equipment in such areas "is a more difficult question, because of the existing use that was on the property at the time of the valuation" (Tr. 211). Pursuant to DEC Regulations, a change in the use or current footprint of a particular activity would not be permitted in wetland areas or the attendant 100-foot adjacent area. Maintenance of current lawfully-existing uses are, however, exempt from DEC regulatory authority. In particular, Ms. Beall cited 6 NYCRR 663.4 which contains a table of uses, the first item of which establishes an exemption for continuing lawful existing uses of a property.
Ms. Beall described a floodway as an area of high volume water movement during a flood event. A permit from the Town of Marcy is required to build within the floodway. The floodplain was described as "a location where water sits on the site during flood events" (Tr. 215). Claimant's entire property is within a floodplain area. She stated that the presence of wetlands did not preclude the owner from building on the property although a permit from either the Corp of Engineers or DEC would be required to the extent they were expanding the footprint of any current use. A joint permit application can be made in areas subject to dual regulation by the DEC and Corp of Engineers. Ms. Beall stated her view that the DEC would view any expansion of the use of the subject property "pretty stringently" because the property lies adjacent to the Utica Marsh, a Class 2 wetlands (Tr. 218). When asked her conclusion regarding the development potential of the property she replied that in her view the DEC likely "would be amenable to continuing the existing limits of development on the southern property, but on the northern property, that DEC wetland would - and its adjacent area would be protected by the DEC" (Tr. 223).
On cross-examination the witness testified that she visited the subject property on June 5, 2014 and "the date that we were asked to establish valuation from was November 27, 2010" (Tr. 225-226). In order to correlate the results of her site inspection in June 2014 to the valuation date of November 27, 2010, Ms. Beall reviewed aerial photographs obtained from Google Earth depicting the property at various times from May 1995 through July 2011. According to the witness the photographs "illustrate to us whether or not particular portions of the site had been used as a salvage yard versus other areas that had [not]" (Tr. 227). Although she agreed that if the preexisting use encompassed the entire property wetland and floodplain regulations would not affect the continuation of that use, she stated that during her site visit she determined that the wetland located in the northeastern portion of the property had not been utilized as part of the existing use of the property "based on the size of the vegetation and the appearance of the site" (Tr. 233). In her opinion, the area north of Schuyler Road was intact and had not been significantly disturbed given the size and sampling of vegetation and functionality of the wetland. When asked whether DEC could prevent the use of the northern portion of the property if it had been utilized as part of the ongoing salvage yard enterprise she responded that DEC could act to the extent it determined continuation of the use of that portion of the property was having an adverse effect on the functionality of the wetland. Any discontinuation of an existing use would be implemented by Order and Ms. Beall acknowledged that she was aware of no such Order having been issued with regard to use of the northern portion of the subject property. She then reiterated her view that DEC "would likely not allow encroachment into the area of the wetlands in the northern part of the property" (Tr. 257), although she also recognized that existing uses are exempt from wetland regulations to the extent the footprint is not extended and there are no issues of petrochemicals or other such products impacting the wetlands.
On redirect examination Ms. Beall stated that the southern portion of the subject property contained thick rubble, concrete pads and fill which would permit the storage of vehicles without impacting wetland functions. The portion of the site north of Schuyler Road "did not appear like cars had been stored on it" (Tr. 260). Except for a small area in the northwest corner, the portion of the property north of Schuyler Road "was in a much more natural state, much more highly functioning, much more wetlandy than the area in the southern part of the site" (Tr. 261). She described trees of five to seven inches in diameter and large saplings measuring three inches in diameter. The witness stated that vegetation of that size and dimension requires ten to fifteen years of growth, indicating that the area had not been significantly disturbed at least during that period.
The defendant called Todd Thurston, a certified general real estate appraiser in the State of New York with 25 years of experience appraising property. He related that he conducted a valuation of the claimant's property at 67 Barnes Avenue and prepared a written report received in evidence as Exhibit A. In addition to the subject property, he also inspected three other salvage yards and a shooting range located on Barnes Avenue which were affected by the bridge closure on November 27, 2010.
Mr. Thurston described Barnes Avenue as a two lane roadway with no sidewalks, curbing or street lighting. He considered Barnes Avenue an area of rural density which was not visible from any major roads. He inspected the buildings located on the subject property during his site visit on May 6, 2011. He described the buildings as "pretty basic structures", being in fair condition and composed of a concrete section constructed in 1963 and storage areas built on the north and south ends of the concrete structure during the 1980s (Tr. 280). Interior and exterior views of the buildings are included in Exhibit Y, a series of photographs of the property taken during the inspection on May 6, 2011.
The witness testified that he utilized two effective dates in arriving at his valuation of the subject parcel, the date the bridge allowing access to Barnes Avenue was closed (November 27, 2010) and the vesting date (June 6, 2011). He related that the subject parcel was located in a floodplain zone pursuant to the Town of Marcy's zoning regulations (Exhibit Z), which authorized the continuation of existing uses, including the use as an auto salvage yard, subject to site plan review. One of the first steps taken in preparing his appraisal report was to determine the extent of the developed site, that portion of the property actively used in the auto salvage business operation. The scaled drawing on p. 33 of the appraisal identifies the areas which he determined were actually utilized in the claimant's auto salvage operation,including the entire 6.6 acre parcel south of Schuyler Road and two acres in the northwest portion of the property north of Schuyler Road. The wooded area in the northeast as well as the entirety of the easement (Schuyler Road) which bisected the property were not, according to the witness, utilized in the conduct of the auto salvage enterprise. As a result, the witness concluded that 8.6 acres of the 13.2 acre site were actively used in the auto salvage business. As indicated in his appraisal report at pp. 34-36, Mr. Thurston determined that the existing auto salvage facility use was the highest and best use for the property as improved.
Mr. Thurston utilized the sales comparison approach in valuing the subject parcel. He first attempted to identify properties within Oneida County which had been sold within two years of vesting, were at least five acres in size and were purchased for junkyard use. He was unable to identify any such sales. Instead, he stated that in his experience junkyards correlate to industrial properties and he therefore attempted to identify sales of industrial properties within the Utica/Rome area of similar size to compare to the subject property. Although not identical to the subject property, the comparable sales were considered similar in that "[t]hey're sales of acreage in the Utica/Rome market, industrial oriented type conveyances" (Tr. 300). He testified that he personally verified each sale to the extent such was possible.
Discussing the comparable sale grid contained on p. 38 of his report, Mr. Thurston first indicated that he applied a negative 4% adjustment to the comparable properties to account for the reduction of fee simple status represented by the easement (Schuyler Road) that runs through the property. The 4% reduction was necessary because "[t]hat permanent easement does not allow the subject's use of that area as they would the rest of their acreage" (Tr. 301). A negative 10% location adjustment was applied relative to land sales 1 and 2 to reflect their superior location and visibility. An additional negative 10% adjustment was made to comparable sales 1 and 2, and a negative 5% adjustment was applied to comparable sale number 3 because smaller parcels are assigned a higher unit value. A further negative 10% adjustment was made to recognize the superior soil conditions and drainage of the comparable sales relative to the subject. In this regard, Mr. Thurston explained that the subject's location in a floodplain and the presence of substantial wetlands on the property inhibited its development and justified the application of a negative 10% adjustment. With regard to available utilities, a negative 10% adjustment was made to reflect that comparable sales were serviced with natural gas, public water and sanitary sewers whereas the subject had only a well which produced non-potable water. Finally, a further negative 10% zoning adjustment was applied in order to reflect "the lack of flexibility of the floodplain district" (Tr. 303). Based on his examination of the subject and comparable sales, the witness testified that he valued the subject property as vacant on the date of appropriation at $10,000 per acre or a total land value of $132,000 for the 13.2 acre property.
Mr. Thurston testified that he further valued the subject as improved. Utilizing the cost approach to valuation he first determined the reproduction costs, applied depreciation to both building and site improvements and combined the two to determine the value of the property as improved. His analysis is contained on page 42 of his report. Using a commercial estimator application he determined that the reproduction costs of the buildings and site improvements at the subject property was $233,459. To this amount he added what he identified as soft costs including fees and costs associated with development of the property. The calculation was completed by applying amounts attributable to physical deterioration and functional and external obsolescence, resulting in a finding that the depreciated value of improvements was $77,745; to which was added the $132,000 land value and $9,300 reflecting the depreciated value of site improvements. Market value as indicated by application of the cost approach method of valuation is $219,045. As noted in the report, however, the conclusions reached from the cost approach method should be "considered a secondary guide to value due to subject's extended age" (Exhibit A, p. 48).
Mr. Thurston testified that because the subject was not a special purpose property and the improvements were quite old, it was his opinion that the sales comparison approach was the preferred method of valuing the property. In this regard, he first determined the portion of each comparable sale which was dedicated and utilized in the owner's actual business operations. Once the developed site was determined for each comparable sale, Mr. Thurston divided the total sale price by the number of acres contained within the developed site of each. For example, improved sale number 1 was 26.5 acres in size but only 10 acres was identified as the developed site area. The total sale price of $250,000 was divided by the 10 acre developed site area resulting in a developed site sale price per acre of $25,000. A further adjustment was made to each property to recognize the value of excess land contained within the parcel but not utilized in actual business operations. Based on his experience as an appraiser, Mr. Thurston valued the excess land at $500 per acre. Finally, a $10 per-square-foot value was ascribed to building improvements. In this regard, Mr. Thurston described his analysis by way of example, as follows:
"So Improved Sale 1, it has an 8,800 square foot building complex. It's deducted from the subject. A $10 per square foot contribution is applied. That overall contribution in the case of Improved Sale 1 is $33,520. It's divided by the developed site, because I'm - my unit of comparison is based on developed site, and the corresponding adjustment in the case of Improved Sale 1 is thirty - a minus $3,350" (Tr. 320).
After making the adjustments related above, Mr. Thurston determined the value of the subject property to be $24,000 per acre of the developed site (nine acres) for a total indicated value of $216,000.
The witness testified that he had previously reviewed Exhibit P, an asset purchase agreement in which the owner of the subject property, Mr. Viti, agreed to sell the property as a going concern including his realty, personal property, and good will. The agreement, dated August 23, 2007, contemplated the sale for a total purchase price of $250,000. Although not used directly in his analysis because the $90,000 allocated to real property in the sale documents was too low, Mr. Thurston stated "it is a consideration in determining what the value of the property is" (Tr. 327). He also reviewed general business corporation tax returns prepared for A-1 Auto Parts for the years 2007 and 2008 (Exhibit Q, Exhibit R). In 2007, the stated fair market value of real property and marketable securities for A-1 Auto was $200,000. Adjusted total assets are listed as $210,000 (Exhibit Q). In 2008, the fair market value of real property and marketable securities is stated as $200,000 and adjusted total assets $210,000 (Exhibit R). The witness stated that the amounts set forth for the fair market value of real property and marketable securities in Exhibits Q and R "is within a reasonable range of my market valuation" (Tr. 335).
The witness concluded his direct examination by stating that following closure of the bridge on November 27, 2010, the subject property had a value of zero dollars. The witness determined that the value of the property on the date of valuation was $216,000.
Mr. Thurston testified on cross-examination that on May 6, 2011 he participated in an inspection of several properties located on Barnes Avenue which were affected by the bridge closing on November 27, 2010. Among the properties inspected were three auto salvage yards including B&W, Bob's, and the claimant herein, A-1 Auto Parts. With regard to his inspection of the A-1 Auto Parts site, he stated that the buildings were open and vacant and composed of a central concrete block section and office, restrooms, a service bay and a pole barn section. In addition, he recalled that there was a fence "[b]arely" standing along the length of Schuyler Road (Tr. 351). Although there were no openings in the fence which ran along the southern boundary of Schuyler Road, Mr. Thurston testified that a similar fence which ran along the north side of the easement contained "a couple of openings" (Tr. 351). When asked whether he inspected that portion of the claimant's property located north of Schuyler Road the witness stated that with the exception of a clearing on the southwestern portion of the property north of Schuyler Road, which was open and clearly visible, he did not inspect the more heavily wooded area which occupies the northeastern portion of the property. He was asked whether his inspection of the portion of the property on the north side of Schuyler Road was "probably just walking inside the fence a little ways" to which he responded "[t]hat's pretty much it. Yes" (Tr. 354). Mr. Thurston testified that he included the two-acre area in the southwest corner of the north side of Schuyler Road in his unit value or developed site for the property. He did not include the remaining portions of the property north of Schuyler Road in his calculation of the developed site based primarily upon the report prepared by the Chazen Companies.
Mr. Thurston agreed that the claimant's use of the property as a salvage yard was a legal nonconforming use. He also agreed that the permit issued to A-1 Auto Parts authorizing the conduct of an auto salvage facility places no restrictions on which areas within the property may be utilized as part of the authorized use. He disagreed with the premise of claimant's appraiser that auto salvage yards are primarily valued based on the value of the land and not on improvements to the property. Rather, potential purchasers are likely to view the property comprehensively as a going concern focusing on the potential income produced by the business.
The witness testified that while the claimant's use of the property as an auto salvage facility is legally permissible within the floodplain district, a commercial or industrial use of the property is not legally permissible. He agreed that he had stated in his report that as a class junkyards are uncommon in the market. It is for this reason, according to Mr. Thurston, that he evaluated the claimant's use of the property as "quasi-industrial" which he described as "the next best thing" given the dearth of junkyard sales (Tr. 381). Although he agreed that, ideally, comparable sales used in an appraisal should have the same highest and best use, where that is not possible, as here, an appraiser will seek to identify similar uses upon which to compute value. In the instant matter, an industrial use is "a similar use" to that of an auto salvage facility (Tr. 382). Mr. Thurston agreed that his calculation of the contributory value of the building improvements to claimant's property ($14.27 per square foot) were substantially similar to that determined by claimant's appraiser Mr. Bruckner ($14.40 per square foot). There was also substantial equivalence in the respective value of site improvements between Mr. Thurston ($9,300) and Mr. Bruckner ($9,500). As a result, the differences between the claimant and defendant revolve around the question of land value. In this regard, Mr. Thurston testified to his opinion, as stated in his appraisal, that the total area of the property represented by Schuyler Road should be valued at 20% of its fee simple value due to the fact that, although it may be utilized by the claimant, the easement is effectively a roadway servicing lands to the east which impairs ancillary uses of the property owner. According to the witness "the fact that the owner can ingress/egress . . . it does not sever his ability to use two parcels, but it diminishes the utility of the site" (Tr. 401).
Turning to the issue of comparable sales, the witness testified that he identified land sale number 1 as a superior location because it had "good visibility and exposure" (Tr. 404). He noted that sale number 1 was a manufacturing site located in Rome, New York and that the sale was
"motivated by its location" (Tr. 405). According to Mr. Thurston, a comparison between the subject and industrial/commercial properties is appropriate because "junkyard use is an industrial use, they're synonymous" (Tr. 407).
Addressing the comparable sales of improved properties (Exhibit A, p. 55), the witness testified that he applied an adjustment to improved sale number 1 to reflect that it was inferior with regard to proximity to a population center and access to major routes. All of the improved sales selected for comparison with the subject were engaged either in the crushing of vehicles or auto salvage business, or sometimes a mixture of both. All were going concerns. He agreed that outside factors may affect the allocation between real estate and non-real estate components of a transaction and that the best practice is to secure an independent valuation of the components of each sale. He stated that although a broker assisted in establishing the real estate allocation for improved sale number 1, no independent appraisal report was prepared relative to the sale. Nor was a formal appraisal performed regarding the constituent components of sale number 2. Although Mr. Thurston testified that he had sought to confirm the real estate allocations of each sale and interviewed persons involved therewith, he agreed that even a deliberate allocation between the realty and non-realty components of the sale may still be affected by outside influences which determine the allocations. He was unaware whether an appraisal had been prepared regarding improved sale number 3 and stated that he attempted to confirm the accuracy of the real estate portion of the sale through the broker involved. With regard to improved sale number 4, Mr. Thurston testified that he was unable to determine the total price paid but only that a real estate allocation was made and the amount of the allocation. He was unaware whether an appraisal had been performed with regard to improved sale number 4.
Claimant called Salvatore Viti, owner of A-1 Auto Parts, Inc. , which purchased the property located at 67 Barnes Avenue in July 1988. Mr. Viti testified that the area of the property south of Schuyler Road was used to store newer cars which were used for salvage parts and the western portion north of Schuyler Road was used to store older cars until they could be crushed. Mr. Viti provided the following testimony regarding use of the northeastern portion of the property:
"On the east side of the parcel, we had like, a Bobcat trail that we would go down to the end of the property, and we would, you know, put like, rear ends, doors, small stuff that we would keep there until we crushed, and then we would take them out with the Bobcat. I would take them out or the crusher people would take them out" (Tr. 455).
According to Mr. Viti the entire wooded area in the northeast portion of the property was utilized for storing smaller salvage parts as indicated above. He further testified that he utilized Schuyler Road "on a daily basis" in the conduct of his auto salvage business (Tr. 459).
The witness testified that he entered into a purchase agreement with Vladimir Suprunchik in which Mr. Suprunchik purchased the property located south of Schuyler Road, including the buildings and a loader, for $250,000 (Exhibit P). Prior to entering into the purchase agreement an appraisal was prepared which valued the entire property, including that portion north of Schuyler Road, at $384,000. According to Mr. Viti, Mr. Suprunchik occupied the property south of Schuyler Road from 2005 until August 2008 when he was evicted for non-payment of monies due pursuant to the purchase agreement. During the time that Mr. Suprunchik occupied the southern parcel, Mr. Viti continued his business on the northern portion of the property which he described as "stacking cars and parts" (Tr. 463). The allocation between realty and non-realty portions of the proceeds contained in the purchase agreement were determined by Mr. Viti's lawyer and accountant and was not a matter in which he was personally involved. Following the formal eviction of Mr. Suprunchik, Mr. Viti re-occupied the portion of the property south of Schuyler Road and restarted his auto salvage operations.
On cross-examination Mr. Viti agreed that the amended and restated asset purchase agreement identified the sale as including two specific tax lots (nos. 306.000-2-40 and 306.000-2-41) which he recognized as the area bordered in yellow in the aerial photograph contained on page 6 of Exhibit A (the entire property at 67 Barnes Avenue, including the portion north of Schuyler Road). Notwithstanding the language contained in the purchase agreement, Mr. Viti testified "[t]hat's all he bought was the south side, and it was agreement between the two of us and our two lawyers. He wasn't getting that parcel" (Tr. 472).
Finally, the Court permitted defendant to call Robert Senior, an environmental engineer 2 with the New York State Department of Environmental Conservation. Mr. Senior testified that he first became involved with the property at 67 Barnes Avenue in 1997 as the result of a tire fire and that he visited the property approximately 30 to 35 times in the years following. He stated that based upon his observations while at the property, the majority of the wooded portion in the northeast corner was not utilized as part of the auto salvage business operation. According to Mr. Senior, he had a particular interest in the area in the northeast portion of the property because flooding events "would drag the tires out through the wooded area" (Tr. 500-501). He did note that this area contained remnants of old vehicle parts although "nothing that you would stockpile and use for the general public at large to sell to" (Tr. 500).
On cross-examination Mr. Senior testified, as he had on direct, that he visited the subject property on October 22, 2010 and October 7, 2011. When asked whether his description of the wooded area in the northeast portion of the property was based upon what he observed during his visits on the dates referenced above he replied in the affirmative. Although he was aware that the bridge permitting access to Barnes Avenue was closed on November 27, 2010, he was not aware whether the owners had been advised to remove all of their property from the premises prior to the bridge closing.
A property owner is entitled to just compensation when his or her property is appropriated for public use (US Const, 5th Amend; NYConst, art I, §7 [a]), including payment for loss of suitable access to the property (Egerer v New York Cent. & Hudson Riv. R.R. Co., 130 NY 108, 114 [1891]). "The fact that the taking and closing of . . . [a street does] not involve any direct taking of [claimant's] land does not preclude recovery in damages if, through that taking, claimant's property was in fact deprived of suitable access" (Chemung Canal Trust Co. v State of New York, 90 AD2d 889, 890 [1982]; see also Gengarelly v Glen Cove Urban Renewal Agency, 69 AD2d 524, 526 [2d Dept 1979]). Property owners are therefore entitled to compensation when conduct of the State or municipality results in the loss of their right to enter or exit their property (id.; Pollak v State of New York, 41 NY2d 909 [1977]; see also Priestly v State of New York, 23 NY2d 152 [1968]; Matter of County of Schenectady (Pahl), 194 AD2d 1004 [3d Dept 1993], lv denied 83 NY2d 756 [1994]; lv denied 84 NY2d 806 [1994]; Matter of Smith v Gagliardi, 286 AD 873 [2d Dept 1955]). It is undisputed in the instant matter that the closure of the Barnes Avenue Bridge on November 27, 2010 deprived claimant of its sole means of access to the property thereby rendering it valueless. While the bridge closure may have given rise to a de facto taking claim as of the date of the closure (see e.g. Sarnelli v City of New York, 256 AD2d 399 [2d Dept 1998], lv denied 93 NY2d 804 [1999]; rearg denied 93 NY2d 958 [1999]; Champion Oil Co., Inc. v State of New York, 161 Misc 143 [Ct Cl, 1936], affd 251 AD 781 [4th Dept 1937]), absent such circumstances, the acquisition of real property by the State is complete and title vests in the State as of the date the State files a certified copy of its acquisition map in the Clerk's office of the County where the property is located (EDPL § 402 [A] [3]; see also Putney v People, 94 AD3d 1193, 1194 [3d Dept 2012], lv dismissed 19 NY3d 1020 [2012], lv dismissed 21 NY3d 909 [2013]). Access to the subject property was formally appropriated by the State's filing of Map 4 on June 6, 2011, the stated purpose of which was "to fully prohibit the right of access to and from abutting property along the portion of the existing highway boundary described" (Exhibit E at p. 2). While it appears likely the claimant could have sought damages for a de facto taking as of November 27, 2010, the date the bridge was closed, its claim is limited to the assertion of damages from June 6, 2011, the date the State filed a certified copy of its acquisition map in the Office of the Oneida County Clerk. Notably, although Mr. Thurston testified that there was no change in the value of the subject property between the date the bridge closed and the vesting date (Tr. 274), he also acknowledged the fact that one of the buildings on the subject property was destroyed by fire sometime after the bridge closed but before the acquisition maps were filed (Tr. 385). As a result, Mr. Thurston included in his appraisal of the property the square footage of the buildings as they existed on the date of the de facto taking - a total of 5,448 square feet (Tr. 385-386; Exhibit A, p. 6). Claimant's appraiser, on the other hand, valued the buildings as they existed on the date title vested in the State, which included only a single story 2,820 square-foot warehouse/garage facility (Exhibit 1, p. 26). Inasmuch as the claim is limited to damages from the date the acquisition maps were filed, the Court will assess damages as of this date.
Just compensation "requires that the owner be placed in the financial position that he or she would have occupied had the property not been taken" (Matter of State of New York (KKS Props., LLC), 119 AD3d 1033, 1034 [3d Dept 2014]). The measure of damages is the fair market value of the property at its highest and best use on the date of the taking (Matter of City of New York (Franklin Record Ctr.), 59 NY2d 57, 61 [1983]; Chester Indus. Park Assoc., L.P. v State of New York, 103 AD3d 827, 827 [2d Dept 2013], lv denied 21 NY3d 856 [2013]; Gyrodyne Co. of Am., Inc. v State of New York, 89 AD3d 988, 989 [2d Dept 2011]). Both parties' experts agree that the highest and best use of the subject property at the time of the taking was as an automobile salvage business and that the value of the subject property after the taking was zero. Moreover, both experts were in close agreement regarding the value of the improvements. In fact, Mr. Thurston agreed on cross-examination that "this case is all about the difference in land value" (Tr. 388). Mr. Bruckner valued the property as a automobile salvage facility rather than vacant land because such use was legally permissible and therefore of "significant value" (Tr. 34). He testified that population density, demographics and the presence of auto repair facilities drive demand for auto salvage facility products and that the subject, situated in an isolated area on the City of Utica border in a location close to Oriskany Boulevard, was well located. Of the 120 transfers of junk yards, scrap dealers and salvage facilities within the State of New York since 2000, Mr. Bruckner considered only those that were arms-length transactions based upon an unallocated sales price. According to Mr. Bruckner, allocated sales are frequently based upon tax considerations and are not necessarily reflective of the true value of the land. As a result, in determining land value, Mr. Bruckner utilized sales of automobile salvage facilities from around the state that he found to be comparable to the subject based upon factors such as population density and demographics.
Mr. Bruckner's sale number 1 is located in Wawarsing, New York, a rural area, and adjustments were made for the more favorable financing terms, building improvements, inferior location and economies of scale. The adjusted price per acre was $36,613.
According to Mr. Bruckner, his sale number 2 is most comparable to the subject based upon its size, site improvements and date of sale - it was sold five months after the appropriation. Sale number 2 is located in the Town of Hamburg, outside the City of Buffalo, and Mr. Bruckner adjusted the sale price for the value of the improvements (as he did on all of the comparable sales) and to reflect the superior utilities and special conditions contained in sale number 2's junkyard permit (Exhibit 1, pp. 44-46; Tr. 161). The adjusted price per acre was $36,431.
Like sale number 2, Bruckner's sale number 3 is located in Buffalo. Adjustments were made to reflect sale number 3's superior financing (purchase money mortgage), building improvements, inferior location near residential housing and superior utilities. The adjusted price per acre was $25,399.
Sale number 4 is in Manlius, New York, a more rural area, and took place in September 2005. Adjustments were made to reflect the increase in the market from 2005 through 2008 (Tr. 46), the building improvements, inferior location and economies of scale. The adjusted price per acre was $26,868.
According most weight to comparable sale number 2, Mr. Bruckner concluded that the value of the subject land was $36,000 per acre for a total land value of $473,040 ($36,000 x 13.14 acres) (Tr. 148) and the depreciated value of the improvements was $50,000 for a total market value of $523,040 (Exhibit 1, p. 48).
Unlike Mr. Bruckner, Mr. Thurston selected comparable land sales which were closer in proximity to the subject but were not automobile salvage facilities. All of his comparable land sales were zoned general industrial or commercial and none of them permitted a junkyard operation as a matter of right (Tr. 412-413). Moreover, Mr. Thurston conceded that no evaluation of the potential customer base was performed (Tr. 414). Mr. Thurston applied negative adjustments to his comparable land sales to reflect the subject's permanent easement (Schuyler Road), inferior location, larger size, soil conditions/drainage, limited utilities, and floodplain zoning (Exhibit A, p. 38; Tr. 404-413). After applying the adjustments, Mr. Thurston concluded that the subject's land value was $10,000 per acre for a total land value of $132,000 (Exhibit A, p. 41). Utilizing the cost approach to compute the depreciated value of the improvements, Mr. Thurston concluded that the subject's site improvements totaled $87,045.00 for a total market value of $219,000.
Mr. Thurston also performed a sales comparison valuation utilizing four automobile salvage operations (Exhibit A, pp. 49-58). All of the sales were allocated, meaning the purchase price included amounts allocated to the value of the real estate, goodwill and personal property. The first improved sale is comprised of 26.5 acres consisting of 10 developed acres in a "decidedly rural" area. Improvements consist of two buildings totaling 8,800 square feet. The sale price was $375,000 of which $250,000 was allocated to real estate (Exhibit A, pp. 50, Ex. 6-1). The purchase was financed with a purchase money mortgage. Adjustments were made to account for the inferior location, surplus land, and building improvements. No adjustment was made for the favorable financing terms.
Improved sale number 2 is a 35.2-acre automobile crushing operation in a rural area of Genesee County. Only 16 acres are developed and utilized for buildings, parking and storage. The property is impacted by a "large designated wetland" and improved with two metal-clad structures consisting of approximately 7,200 square feet (Exhibit A, p. 51). The sale price was $615,000 of which $450,000 was allocated to real estate (Exhibit A, pp. 51, Ex. 6-4). Adjustments were made to account for the surplus land and building improvements. No adjustment was made for location or the favorable financing terms, although the sale was financed via a purchase money mortgage. Improved sale number 3 is a 25.3-acre crushing operation in Madison County that is improved with 8,700 square feet of useable building space (Exhibit A, p. 52). The purchase, facilitated via a stock sale, was made with a large purchase money mortgage. Though located within the City limits of Utica, it is in a rural area (id.). The sale price was $400,000 of which $250,000 was allocated to real estate based upon conversations with the seller's son-in-law, the real estate broker who facilitated the sale (Exhibit A, p. 52). Adjustments were made for excess land and building improvements. No adjustment was made for location or favorable financing.
Improved sale number 4 is a 68.29-acre site in Herkimer County improved by an 8,600 square-foot metal-clad building. Only 14 acres are developed. The purchase was made with a purchase money mortgage in the amount of $550,000 of which only $250,000 was allocated to the sale of the real estate (Exhibit A, pp. 52, Ex. 6-7). Adjustments were made for excess land and building improvements. No adjustment was made for location or favorable financing. Mr. Thurston testified that location adjustments were unnecessary for improved sales number 2, 3 and 4 because of their proximity to a major highway (Tr. 417). Mr. Thurston opined that the market value for the subject utilizing the sales comparison approach is $24,000 per developed acre (9 acres) for a final value of $216,000 (Exhibit A, p. 57).
All of Mr. Thurston's improved sales were in rural areas and at least three of them are crushing operations (Tr. 419-421) in contrast to an automobile salvage business, such as the subject, which depends upon a dense population to provide a nearby customer base. Significantly, the comparable sales selected with ongoing automobile crushing/salvage operations were all allocated sales in which Mr. Thurston relied entirely on the information provided by the parties to determine the real property allocation without any inquiry regarding the existence of an appraisal (Tr. 423-433). Moreover, Mr. Thurston conceded that there are reasons for parties to a real estate transaction to allocate a price to the real property portion of the transaction that is not reflective of its true value (Tr. 425). Inasmuch as no independent verification of the real property allocations was undertaken, the Court is unpersuaded that defendant's expert's sales comparison valuation represents the market value of claimant's property.
Likewise, in performing his land valuation (Exhibit A, p. 38) Mr. Thurston utilized comparable land sales that were zoned for industrial or commercial use, in which a junkyard operation was not legally permissible as a matter of right. Since both experts agree that the highest and best use of the subject property was for a junkyard, Mr. Thurston's resort to industrial and commercially zoned land sales for the purpose of comparison is unreliable (see Ciuffini v State of New York, 42 AD2d 1036 [4th Dept 1973]; Dann v State of New York, 40 AD2d 578 [4th Dept 1972]).
The Court is persuaded that Mr. Bruckner's valuation methodology more accurately reflects the market value of the subject property in its highest and best use. Although his land-sale comparables were not from the immediate area of the subject, they were sales in which the operation of a junkyard was legally permissible. Moreover, unlike Mr. Thurston's use of improved land sales in decidedly rural areas, Mr. Bruckner's comparable sales were located in densely populated areas more reflective of the subject's location and value as a junkyard operation. The Court also agrees that Mr. Bruckner's sale number 2 is most comparable to the subject property with three adjustments. First, the Court agrees with Mr. Thurston to the extent he found a 10% negative adjustment was necessary to reflect the subject's inferior floodplain zoning. While this zoning did not affect claimant's existing use of the premises, it foreclosed the possibility of any future expansion. The Court also disagrees with Mr. Bruckner's application of a positive 10 % adjustment to his land sale number 2 for the special conditions imposed by the municipality prior to the issuance of a junkyard permit, to wit, the removal of tires from the site and the installation of a screening wall and landscape buffer (Exhibit 1, p. 35). Inasmuch as similar conditions are reflected on the claimant's permit for the operation of a junkyard, the Court does not find a positive adjustment is warranted for the special conditions. Lastly, with respect to the permanent easement representing Schuyler Road, the Court agrees with Mr. Thurston that a negative 4% adjustment is appropriate to reflect the impairment of the subject's fee simple status. After applying a negative 10% adjustment to reflect the subject's inferior zoning, deleting the adjustment for land sale number 2's special conditions and applying a negative 4% adjustment to reflect the subject's permanent easement, the adjusted price per acre of claimant's land sale number 2 is $28,106 (rounded). Accordingly, the Court finds that claimant established by a preponderance of the credible evidence that the market value of the subject land on the date of the taking was $28,106 per acre.
To the extent claimant sought to establish that it used the entire 13.14 acres for the operation of its junkyard business, the Court finds otherwise based upon the testimony of Ms. Beall, the photographs of the area, and an inspection of the property conducted by the Court on January 25, 2016. Ms. Beall persuasively testified that the 2.2 acres of wetlands on the northeast portion of the property contained mature vegetation and other indicators inconsistent with use of the area to store small parts or vehicles. The Court does not find Mr. Viti's contrary testimony that small parts were routinely stored in this wetlands area credible. Accordingly, the Court finds that of the subject's 13.14 acres, only 10.94 was used in the claimant's automobile salvage business. The Court therefore adopts the value of claimant's expert's land sale number 2, with the adjustments described previously, and concludes that the market value of the land on the date of the taking was $307,479 (rounded) ($28,106.00 x 10.94 useable acres).
There being no significant disagreement regarding the per- square- foot value of the subject's improvements, the Court credits Mr. Bruckner's valuation of the improvements as they existed on the date of vesting and awards $50,000 for the improvements for a total market value of $357,479 on the date of vesting (June 6, 2011).
The Court is unpersuaded that the unconsummated contract of sale for the subject premises, dated August 23, 2007 (Exhibit P), is conclusive evidence of market value on the date of the taking. It is true that "the purchase price set in the course of an arm's length transaction of recent vintage, if not explained away as abnormal in any fashion, is evidence of the 'highest rank' to determine the true value of the property at that time" (Plaza Hotel Assoc. v Wellington Assoc., 37 NY2d 273, 277 [1975] [citation omitted]; see also Vasile v State of New York, 30 AD2d 1042 [4th Dept 1968], affd 24 NY2d 969 [1969]; Briarcliff Assoc. v Town of Cortlandt, 272 AD2d 488 [2d Dept 2000], appeal dismissed 95 NY2d 886 [2000], lv denied 96 NY2d 704 [2001]). To the extent defendant contends in its post trial brief that the best evidence of value is the contract of sale for the subject property, several observations are in order. First, while the claimant failed to proffer evidence that the contract of sale was anything other than an arms-length transaction, to require that it do so here would be unreasonable since the defendant failed to notify the claimant of its intent to rely upon the contract at the time of trial (Court of Claims Act § 16; cf. Dennison v State of New York, 28 AD2d 28 [3d Dept 1967], affd 22 NY2d 409 [1968]). More significantly, however, neither appraiser relied upon the unconsummated contract of sale as evidence of market value. The contract price of the subject premises, $250,000, was allocated to tangible property ($7,000), goodwill ($103,000), a non-compete covenant by claimant ($50,000) and the real property ($90,000) (Exhibit P, p. 4). Mr. Thurston acknowledged in both his report (Exhibit A, p. 57) and at trial (Tr. 325, 327) that the allocation for real estate was understated. Given this concession and both appraisers' lack of reliance on the contract, the Court is unpersuaded that the contract price or any portion of it represents the best evidence of market value.
While even an unconsummated contract of sale executed by the parties at arms length may be considered in determining market value (Dennison v State of New York, 28 AD2d at 30; Matter of Western Ramapo Sewer Extension Project, 120 AD3d 703 [2d Dept 2014], lv denied 24 NY3d 917 [2015]; Novack v State of New York, 61 AD2d 288 [3d Dept 1978]), the proof offered at trial is inadequate to support the conclusion that the purchase agreement is the most reliable indicator of market value. Perhaps because neither appraiser considered the agreement in their respective valuations, very little proof was received relative to the making of the agreement. What evidence was provided, including Mr. Viti's testimony that only the property south of Schuyler Road was transferred pursuant to the purchase agreement, only served to cloud, and not to clarify, the issues. Given the paucity of reliable proof regarding the purchase agreement, the Court concludes that the purchase agreement is an inferior basis upon which to determine the subject property's market value.
Furthermore, reliance on such unconsummated contracts as evidence of value has been limited to situations where the performance promised is not yet due and the parties still intend to perform, or "the transaction contemplated under the contract would have occurred but for the defendant's actions or the interference of a third-party" (Schonfeld v Hilliard, 218 F 3d 164, 179 [2d Cir 2000], citing Novack, 61 AD2d 288; 57 NY Jur. 2d Evid. § 232 [1986]). Here, the sale of the subject property was not frustrated by the taking and the reason for the vendee's breach remains unknown. Under these circumstances, the Court is unpersuaded that the unconsummated contract of sale was an arms-length transaction that constitutes reliable evidence of market value.
The Court makes no damages award for the temporary easement that was taken to enable demolition of the structures and site improvements. As Mr. Thurston explained, compensation is based upon a full taking and any damages award for the temporary easement would exceed the market value of the property (Exhibit A, p. 66; Tr. 339-340).
Accordingly, Claimant is hereby awarded consequential damages in the amount of $357,479 together with interest at the rate of 9% per annum commencing on June 6, 2011 through the date of this decision and thereafter to the date of entry of judgment, except no interest shall be allowed from November 15, 2014 through December 30, 2014 pursuant to the stipulation of the parties dated January 5, 2015.
As nothing in the record established the date of personal service of the notice of acquisition on the claimant, interest on the award should not be suspended pursuant to EDPL 514 (B) for any period preceding the filing of the claim (Sokol v State of New York,272 AD2d 604 [2000]). --------
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.
February 23, 2016
Saratoga Springs, New York
FRANCIS T. COLLINS
Judge of the Court of Claims