Opinion
30021/97.
Decided on January 15, 2008.
Fred Kolikoff, Assistant Corp. Counsel, New York, NY.
Michael Rikon, Esq., Joshua Rikon, Esq., Goldstein, Goldstein, Rikon Gottlieb, New York, NY.
At issue in this condemnation proceeding is the just compensation to be awarded to claimant, Mobil Oil Company (Mobil), for the taking of the subject property, located in Brooklyn (Block 2527, Lot 2) (the Property or the Site). The condemnee, the City of New York (the City), took title on September 19, 1997 (the vesting date). The court viewed the property on May 4, 2005 and this non-jury trial took place on July 26, 27 and December 4, 5, 6, 7 and 8, 2006.
Facts and Procedural Background
The City acquired title to the Property for use as part of the Newtown Creek Water Pollution Control Plant. It is located at the corner of Greenpoint and Kingsland Avenues, is zoned M3-1, has a floor area ratio (FAR) of 2 and is approximately six acres in size. As of the time of vesting, steel petroleum storage tanks were located on the Site; the storage facility had not been operational for some time.
As is also relevant herein, on or about September 19, 2000, the City commenced an action against Mobil under Navigation Law § 181(1), claiming that Mobil was strictly liable for the costs and damages resulting from the remediation, cleanup, and removal of petroleum which Mobil discharged onto the property ( City of New York v Mobil, Kings County Sup Ct, Index No. 32613/00) (the Navigation Law Action). By decision dated October 8, 2002, this court granted Mobil's in limine motion for an order excluding evidence at the trial of this action of any diminution in the value of the Property by reason of the remediation costs of the petroleum spill as claimed in the Navigation Law Action and granted the City's cross motion for an order directing Mobil to produce information relating to Home Depot's offer to purchase the Property. The City appealed the decision.
The Appellate Division, Second Department, agreed that evidence of the cost of environmental remediation should be excluded from this trial, but directed that the condemnation award should be held in escrow pending the outcome of the Navigation Law Action, holding that:
"At the condemnation proceeding, the property should be valued as if remediated.' It must be pointed out that valuation of property as if remediated' is not exactly equivalent to valuation of clean' property. As stated by Professor Nichols in his treatise on eminent domain, even after remediation "stigma" may persist, depressing value below "fair market value"' (7A Nichols, Eminent Domain § 13B.04 [1]; § 9A.07; see Matter of Commerce Holding Corp. v Board of Assessors of Town of Babylon, 88 NY2d 724, 732, supra; Matter of Allied Corp. v Town of Camillus, 80 NY2d 351, 356; Housing Auth. of City of New Brunswick v Suydam Invs., L.L.C., 177 NJ 2, 22; SCA Servs. of Ind., Inc. v Thomas, 634 FSupp 1355). Thus the term as if remediated' takes into account any residual stigma which may attach to real property as a result of the fact that it was previously contaminated."
( 12 AD3d 77, 84) (the Appellate Division Decision).
By order to show cause returnable July 25, 2007, the day before the trial began, claimant moved for an order precluding the introduction of any evidence at the trial of the cost to demolish the petroleum storage tanks and equipment on the Property.
Claimant's Appraisal Report
After inspecting the Property on October 7, 1997 and October 23, 1997, by report dated February 18, 2000, Jerome Haims and Eric Haims of Jerome Haims Realty, Inc. (Haims), values the Property at $42.50 per square foot, or $10,330,000, assuming that the highest and best use was for "big box retail."
This conclusion is premised upon a zoning analysis performed by Mitchel T. Wolfe, whose report states that the Property contains 261,142.2 square feet, or 5.995 acres, based upon a survey by Schneider Engineering and included Wolfe's report; the property has frontage of 484.68 feet on Greenpoint Avenue, 872.85 on North Henry Street and 910.99 feet on Kingsland Avenue. The report further states that to be in compliance with the zoning requirements, any big box retailer is required to have one parking space of at least 18 feet by 6 feet per 300 square feet of gross retail space. Wolfe notes that while Home Depot finds this ratio to be unacceptably low, other stores like Staples, Office Max, etc., find one parking space per 600 square feet of retail space to be acceptable. If a retailer wished to maximize the development potential for the Property, the number of available parking spaces could be increased by constructing a parking deck or, in the alternative, constructing additional parking on an adjacent block, i.e., the lot directly across Greenpoint Avenue, which was also owned by Mobil. Wolfe's report included a drawing designated as SK-1, which places a big box retail store on the Site.
The appraisal report describes the Property as being located in a predominantly industrial area. Transportation to and from the Greenpoint section of Brooklyn is described as fair, with the G, L, J, M and Z subway lines stopping in the area; an exit from the Brooklyn Queens Expressway is five blocks to the south of the site; and the area is accessible by the Kosciusko, Pulaski and J.J. Byrne Memorial Bridges. The site itself was improved with 17 fuel and gasoline storage tanks, ranging in size from 93 feet in diameter and 40 feet in height to 30 feet in diameter and 30 feet in height.
In reliance upon six comparable sales, Haims values the Property at $11,098,544. He then subtracts $765,000 as the cost of demolishing the existing storage tanks and other structures and bringing it up to the necessary grade. This cost is premised upon a report prepared by Martin M. Gross and Ralph Bradford of Martin Gross Associates, who assumed that the cost of demolishing the storage tanks would be offset by the salvage cost of the metal, which would result in no cost for the demolition work. Gross and Bradford were also of the opinion that the existing perimeter wall that surrounded the Property would not be demolished, but that it would be necessary to place controlled fill beneath the building.
Claimant's Comparable Sales
In valuing the Property, Haims used comparable sales in both Brooklyn and Queens because he believed that it was important to use sites that were large enough to accommodate a big box retail store.
Comparable sale number 1 was vacant property purchased by Home Depot and located on Northern Boulevard in Long Island City, one mile from the Property (Home Depot — LIC). It was zoned M1-1 and had a FAR of 1 and a developable area of 403,931 square feet. It sold for $49.51 per square foot on October 1, 1997, 15 days after title to the Property vested. Haims adjusted this sale down for location (-20%) and size (-10%) and up for zoning (+10%) and access (+10%), for an adjusted value of $44.56 per square foot
Comparable sale number 2, located on Woodhaven Boulevard in Glendale, Queens, was also purchased by Home Depot (Home Depot — Glendale). It was zoned M1-1, had a FAR of 1, was improved with a 100,000 square foot warehouse that had to be demolished and had a developable area of 200,900 square feet. It sold on July 17, 1997 for $45.55 per square feet. Haims adjusted the property up for size (+5%), access (+10%) and zoning (+10%); Haims then deducted demolition costs of $4.98 per square foot, for an adjusted value of $61.91 per square foot. By Notice of Comparable Sale dated October 30, 2001, claimant served an addendum to Haims' report, stating that Home Depot purchased an additional lot on September 29, 1999, for a total land area of 423,925 square feet. Thus, the correct unadjusted price per square foot for this sale is $59.33.
Comparable sale number 3 is another large, vacant industrial site, located on Hamilton Avenue in Brooklyn, that was purchased by Home Depot (Home Depot — Hamilton Avenue). It was zoned M3-1 and had a FAR of 2 and a developable area of 603,540 square feet; it is the City's comparable sale number 3. It sold for $24.38 on March 27, 1997. Haims adjusted the property down for location (-5%) and up for access (+10%), for an adjusted value of $25.60 per square foot. Also significant with regard to this sale is the fact that Home Depot constructed a parking deck to increase the amount of parking available.
Comparable sale number 4 was formerly a 360,000 square foot, three story bakery located at 13-122 Avery Avenue in Flushing, near the Flushing River, that was also purchased by Home Depot in two separate conveyances (Home Depot — Flushing). It was zoned M1-2, had a FAR of 2 and a developable area of 740,520 square feet and sold for $37.81 per square foot. It had a contract date of December 12, 1992, but the sale did not close until February 8, 1994 because Home Depot had to obtain the variances needed to provide adequate road access. Haims adjusted this property down for size (-10%) and up for access (+10) and zoning (+5%). Haims then deducted demolition costs of $9.72 per square foot, for an adjusted value of $49.42 per square foot.
Comparable sale number 5, located on Metropolitan Avenue in Middle Village, Queens, was purchased by Forest City Ratner in two separate transactions for development as a multiplex theater. It was zoned M1-1, had a FAR of 1, a developable area of 360,978 square feet and was improved with a 90,000 square foot industrial building that had to be demolished. It sold for $22.72 on April 25, 1997. Haims adjusted the property down for size (-10%) and up for access (+10) and zoning (+10). Haims then deducted demolition costs of $2.49 per square foot, for an adjusted value of $27.48 per square foot.
Comparable sale number 6 was vacant land located at 970 Third Avenue in Sunset Park, Brooklyn, was formerly a pipe supply facility and was developed as a Costco store (Costco); it is the City's comparable sale number 1. It was zoned M1-2 and had a FAR of 2 and a developable area of 558,574 square feet. It sold for $29.72 per square foot on January 16, 1996. Haims adjusted the sales price down for location (-5%) and up for zoning (+5%), for a total adjusted sales price of $29.72 per square foot.
Valuation
In reviewing these sales, Haims notes that the average price per square foot was $39.78 and the median was $37.14. In valuing the Property, Haims considered all of the sales, but relied principally upon the most recent sales to Home Depot, for an adjusted sales price of $42.50 per square foot.
The City's Appraisal Report
After inspecting the Site on November 17, 1997, May 20, 1998 and August 15, 1998, by report dated April 24, 2006, Doris Silber of Jacques O. Tuchler Associates (Silber) values the property at $24.00 per square foot, or $3,625,000. Silber values the Property assuming that the highest and best use is for open storage of building materials, such as lumber, stone or gravel, or for parking vehicles, because that was how similarly zoned property in the vicinity was used.
In her report, Silber describes the Property as having 261,067 square feet, with frontage of 484.68 feet on Greenpoint Avenue, 259.70 on the west side of Kingsland Avenue, 652.29 feet on the southwest side of Kingsland Avenue and 872.85 on the east side of North Henry Street. She further notes that the Site was improved with 10 steel oil storage tanks, although the storage facility ceased operations in 1995. Silber also states that a report prepared for the New York City Department of Environmental Protection in February 1997 indicates contamination in both the soil and groundwater, that Mobil entered into consent orders with the New York City Department of Environmental Protection and New York State Department of Environmental Conservation, that conventional lenders would not finance acquisition of contaminated sites and that the typical buyer would require remediation or indemnification from the seller. Pursuant to the Appellate Division Decision, as quoted above, however, Silber did not consider the costs of environmental remediation in the valuation of the property.
In reaching her valuation, Silber relies upon a report prepared by Joseph Wallwork of Greyhawk North American (Wallwork) to subtract demolition costs of $2,641,162. In his report, Wallwork notes that the City actually paid $5,103,007.43 for the demolition work performed at the Site, which also included property owned by Exxon and Williamsburg Steel. To determine the cost of that portion of the work performed on the Site owned by Mobil, Wallwork distributed the costs across the three sites as apportioned by the City's contractor. Wallwork further estimates that the total cost to bring the Site to contract elevation, i.e., to raise the elevation .47 feet as indicated by the City's contract, would require 14,891.24 cubic feet of fill, for a cost $3,434,587, exclusive of salvage value; to raise the elevation to the adjacent street level, or 2.51 feet, would require 34,658.99 cubic feet of fill and would cost $4,369,387, exclusive of salvage value; to raise the elevation as specified by Bradford and Gross, which was unspecified, would require 38,022 cubic yards of fill. Wallwork further estimates that the value of the salvaged steel would be $60 per ton, or $77,000, if the salvage yard picked up the scrap metal, and $83 per ton, or $106,000, if the steel was delivered to the salvage yard. Hence, the total estimated cost of Site preparation was $3,332,100, after deducting the salvage value of the steel. After deducting those costs that would not be incurred by Mobil if it preformed the work itself, Wallwork estimates that the cost of the work would be $2,641,162.38. Wallwork further estimates that the cost of constructing a parking deck on piles, due to the high water table, would be $2,006,100. In addition, the fill necessary to construct a slab on grade foundation was estimated to cost $1,385,200, and a foundation including piles would cost $3,069,000, for an increase of cost of $1,683,800. When these costs are added to the cost of demolition, if performed by Mobil, or $2,641,162, and the cost of raising the grade, $934,800, demolition and Site preparation costs total $7,265,862.
Comparable Sales
In valuing the Property, the City relies upon four comparable sales, all located in Brooklyn. Comparable sale number 1, Costco, is claimant's comparable sale number 6. It was zoned M1-2, had a FAR of 2, a land area of 277,772 square feet and sold for $29.88 per square foot on January 16, 1996. Silber adjusted this sale up for time (20 months at 5% per year), or to $32.37 per square foot; down for location (-10) and because it was in a superior flood area (-10%); and up for zoning (+5%), for a total net adjustment of-15%, for an adjusted value of $27.51 per square foot.
Comparable sale number 2 was located at 6128 8th Avenue in Sunset Park that was purchased by the former lessee/owner of adjacent property to provide needed parking. It was zoned M1-1 and had land area of 158, 311 square feet. It sold for $22.74 per square foot on May 30, 1996. Silber adjusted this sale up for time (16 months at 5% per year), or to $24.26 per square foot; up for frontage (+10%) and zoning (+5%); and down because it was in a superior flood area (-10%), for a total net adjustment of +5%, for an adjusted value of $22.92 per square foot.
Comparable sale number 3, Home Depot — Hamilton Avenue, is claimant's comparable sale number 3. It was zoned M3-1, had land area of 301,770 square feet and sold for $24.38 per square foot on March 27, 1997. Silber adjusted this sale up for time (6 months at 5%), or to $24.99; down for location (-10%) and because it was located in a superior flood zone (-5%); and up for frontage (+15%), for a total net adjustment of 0, for an adjusted value of $24.99 per square foot.
Comparable sale number 4 was located at 222 Morgan Avenue in English Kills, was improved with a 8,400 square foot warehouse and was purchased for use as a refuse transfer station. It was zoned M3-1 and had land area of 180,70 square feet. It sold for $17.10 per square foot on September 5, 1997. Silber made no adjustment for time and adjusted up for location (+5) and frontage (+15%), for a total net adjustment of +20%, for an adjusted value of $20.52 per square foot.
Valuation
In reviewing these sales, Silber notes that the mean price per square foot was $23.99 and that the median was $23.96 and values the Property at $24.00 per square foot.
The Trial Testimony
Mitchel T. Wolfe
Wolfe, an architect and trade fixture appraiser, testified on behalf of claimant that he visited the Property on several occasions. He ascertained that it was zoned M3-1, which allows heavy industrial uses, for the purpose of determining what could be built on the site, i.e., whether it was feasible to develop a big box retail operation, such as Home Depot, Lowes, Staples or Pergament. Accordingly, Wolfe prepared SK-1, which places a big box retail store on the Site, which has 121,019.29 square feet and 408 parking spaces, 18 by 8 ½ feet in size, a use of the Property permitted as of right on the date of vesting. In order to increase the size of the building, the number of parking spaces would have to be increased, which could be done by acquiring an additional parcel of land or by building a parking deck, an alternative actually employed by Home Depot at other sites that it developed.
On cross examination, Wolfe testified that he observed other building supply stores in the area; he did not observe any big box retail stores. Any structure built on the Site would have to be constructed on engineered compacted fill or on piles.
Jerome Haims
Haims testified that he inspected the Site on October 7 and 23, 1997, when he observed an abandoned fuel storage facility owned by Mobil. He believed that there were 17 tanks that were 90 feet in diameter, some tanks that were 30 feet in diameter and piping connecting them.
Haims opined that one of the most important elements of an appraisal is the highest and best use of the property, which was for use as a big box retail store, more particularly, as a Home Depot store. This conclusion was based, in part, upon his conversation with Home Depot's regional real estate manager and his review of recent acquisitions which he viewed as comparable. In so concluding, Haims also noted that as of the date of acquisition, Home Depot had only had one location in Brooklyn and was looking for ten. Moreover, Home Depot was looking to lease or purchase property adjoining that owned by Mobil. Further, at that time, the location would be the closest to Manhattan. In this regard, when claimant learned of Home Depot's interest in the Site, it cross-moved, in limine, to obtain discovery with regard to the purchase, which motion was granted, as noted above. In addition, as of the date of vesting, Haims was of the opinion that there was only a slight demand for industrial property.
Haims further testified that it was the policy of the City to use old industrial sites for big box retail stores because such development would generate jobs and real estate taxes. Since Home Depot was a "destination store," one would go to the store by automobile or truck; it was therefore not necessary to have immediate access to mass transportation. Instead, what was important was that the Site had extensive frontage on Greenpoint Avenue and access to a major thoroughfare that could be used to go anywhere in Brooklyn or Queens via the Brooklyn Queens Expressway or the Long Island Expressway.
In discussing the comparable sales that he relied upon, Haims briefly summarized the findings set forth in his report, adding that he chose comparable sale number 1, Home Depot — Flushing, because it was located approximately a mile from the Site and was zoned M1-1. The property was originally intended to be used as a K-Mart, but was instead sold to Home Depot in October 1997, within a month of the vesting of title of the subject Property. No demolition was necessary because the property was vacant and cleared. Haims adjusted this sale down 20% because Northern Boulevard was a superior location to the Site; down 10% because it was larger, almost 10 acres, and accordingly had more flexibility in design; up 10% because it had better street access than did this comparable sale; and up 10% because it had more favorable zoning, for a total adjusted price of $44.56 per square foot.
Haims explained that comparable sale number 2, Home Depot — Glendale, was approximately four miles from the Site. Following the completion of his report, additional lots were purchased in September 1999, so that the purchase price totaled $25,150,000, or $59.33 per square foot. Haims explained that he included this assemblage to demonstrate that values for big box stores were increasing.
Comparable sale number 3, Home Depot — Hamilton Avenue, was similarly a large industrial site and was adjacent to the Gowanus Expressway; a 120,000 square foot store and a parking deck was erected on the property. Haims testified that the cost of a deck is not a detriment to the land, but is instead a design consideration.
Comparable sale number 4, Home Depot — Flushing, was formerly occupied by the Tasty Baking Company on Avery Avenue, near the Flushing River, in Queens, and was located in a flood zone. Based upon his personal knowledge, Haims knew that the site had soil problems, was sinking and flooded. This property was sold in 1992, but the sale did not close until 1994 because Home Depot needed to obtain variances to provide road access.
Comparable sale number 5 was developed into a mutiplex theater. In valuing the Property, Haims gave this sale the least weight because it was sold by a trustee. Comparable sale number 6, Costco, was located in the Bush Terminal, an industrial park.
After considering the maximum selling price of $61.91, the minimum selling price of $25.60, the average of $39.78 and the median of $37.14, Haims valued the Property at $42.50 per square foot, for a total value of $11,098,544. He then the subtracted the cost of demolition and fill, or $765,000, as determined by Gross and Bradford, for a total value of $10,330,000.
On cross examination, Haims testified that when he inspected the Property on October 7, 1997 and on May 4, 2005 with the court, he did not observe any big box retail stores in the immediate area. When Haims returned to the area approximately two months before he testified, he observed four or five big box retail stores within one-quarter mile of the Site.
Haims also noted that sale number 1 was located in a "coming retail area." Comparable sales number 2 and 5, which were closest to the Site after comparable sale number 1, were over four miles away. Comparable sale number 2 was located in a low-rise commercial and residential area. The uses of the property surrounding comparable sale number 5 were low-rise retail, industrial and residential. Comparable sale number 4 was located approximately six miles from the Site, a 15 to 20 minute drive; the Home Depot that was built there is visible from the Van Wyck Expressway, in an area with small neighborhood stores. The sign for the Home Depot constructed on comparable sale number 3 was visible from the Gowanus Expressway. Haims believed that a parking deck was added there to increase both visibility and the amount of parking.
On redirect examination, Haims testified that if a sewer plant had not been constructed at the Site, it would be a totally different neighborhood. Haims estimated that the size of the plant built there was ten times the size of the plant that existed before the condemnation.
Ralph Bradford
Bradford testified that he is a construction engineer; he had been employed by Chevron Oil and was responsible for building, maintaining and operating a tank system within a refinery, which was connected to a wharf in the San Francisco Bay. He was also employed by Richfield Oil Corporation, responsible for the construction of service stations and the bulk plant terminals in northern California; he was then responsible for the acquisition of real estate and later became an appraiser. In addition, Bradford prepared a replacement cost estimate after Hurricane Hugo hit St. Croix and decimated its oil refinery and a cost analysis for the Taj Mahal in Atlantic City. He and Gross were retained to estimate the cost of clearing the Site and bringing it up to the grade established by Wolfe for development with a building. He inspected the Property in September 1997, when he and Gross also took pictures of the site.
Bradford further testified that he researched the cost of removing the oil tanks by talking with Tom Berenz of Costello Dismantling Company and by reviewing a video tape of the equipment used in the process. The existing oil storage tanks would be taken down by using hydraulic shears to cut them up in a way that they implode from the middle, so that they could be transported to a salvage yard. His research revealed that the salvage value of the steel would be $110 a ton. He accordingly concluded there would be no cost for demolition, since a salvage company would have under taken the dismantling for the salvage value. In his report, Bradford stated that Berenz told him that the "break even" point for the value of scrap metal versus the cost of demolition and delivering it to the scrap buyer occurs when scrap metal buyers are paying in the range of $70 to $80 per ton. As of the date of vesting, the scrap metal value of steel ranged from approximately $100 to $110 per ton; the existing scrap metal items at the Site weighed approximately 2,500 to 3,000 tons. Hence, the difference between the cost of removal and the value of the scrap metal indicates an anticipated profit of approximately $30 per ton, or $90,000, which would have been sufficient to attract a demolition contractor.
After adding the cost of the fill needed to bring the Site up to the grade specified by Wolfe, Bradford opined that the Site preparation cost would be $765,000.
On cross examination, Bradford testified that Mobil represented that the tanks would be clean and empty at the time of demolition; he did not believe that the tanks had been cleaned as of the date of vesting. Bradford did not know the cost to purchase or rent the equipment that would be needed to demolish the tanks, how many hours the work would take, the cost of the labor, the number of truckloads of material that would be removed or where the demolished material would be taken, since the contractor would be responsible.
Arline E. Vogel
Vogel, who testified on behalf of condemnor, stated that she was employed as the principal and chief financial officer of Mosbacher Property Group, the owner, developer and manager of retail property; her responsibilities include involvement in site acquisition, site reports, financing, negotiating and leasing. Vogel testified that she managed four big box properties, which she defined as having 20,000 to 30,000 square feet or more. Mosbacher owns an Urban Outfitters and she was "involved" with Circuit City, Saks Off Fifth and a number of movie theaters. She and her colleagues analyzed sites as though they were considering purchasing and leasing them for use as big box retail stores.
After looking at the Property, Vogel concluded that it could not be used as a big box retail store. She testified that the Site was not suitable in that it fronted on Greenpoint Avenue, which is essentially an industrial road that would be "uncomfortable for passenger traffic;" in addition, the road is often in poor repair. Further, the Site is not located in what is perceived as a retail area, there is no pedestrian traffic, there is no residential neighborhood from which to draw customers in the immediate area, there is insufficient parking, a sewer plant is not an ideal neighbor, the site would require extensive environmental remediation because lenders would not want to get involved with properties having such issues, and there is no access by mass transit. In this regard, Vogel testified that the nearest subway stop is one-half mile away, on the G line, which does not go into Manhattan. In additional, there is only limited access by bus, with buses running only every half hour during the weekend. The Site also has limited visibility and problematic access from the Brooklyn-Queens Expressway and the Long Island Expressway, the two major thoroughfares closest to the Site; big box retail store customers look for immediate access from main roads.
In her report, Vogel notes that the exclusive real estate broker for Costco advised her that Costco would not be interested in a site that did not have easy ingress and egress. Similarly, the real estate broker for Staples advised her that when Staples makes a choice about where to place a store, it takes into account "psycho-graphic" barriers, such as the unattractiveness of the area and uncomfortable driving conditions. In addition, the Site provides inadequate parking, since Staples requires one parking space for every 200 square feet of store, while Costco looks for one parking space for every 155 square feet.
Vogel also opined that the comparable sales relied upon by Haims were more desirable for a big box retail store than is the Site. In this regard, comparable sale number 3, Home Depot — Hamilton Avenue, is more visible from the highway and a subway station is located two blocks away. Comparable sale number 1, Home Depot — Flushing, is located in a prime big box retail area, among several other big box retail stores. Comparable sale number 6, Costco, has superb visibility and is near a residential area. Comparable sale number 4, Home Depot — Flushing, has superior visibility in that it is directly visible from the Van Wyck Expressway and it is perceived as a retail destination. All of the comparable sales are located in areas having greater population density.
On cross examination, Vogel testified that of the four big box retailers that she had experience with, one was a grocery store located in Dutchess County. The second was a site in Pittsburgh, Pennsylvania that the company had under option; although the company was talking to Circuit City, Toys R Us and other similar retailers, the property was ultimately sold without being developed for use as big box retailer. The third is a 50,000 square foot site on 14th Street in Manhattan, which has one tenant, Urban Outfitters, which leases a 26,500 square foot retail store and 2,000 square feet of storage space. The fourth is a 32,000 square foot grocery store located in Philadelphia, which is adjacent to other big box centers.
Vogel believed that the Site could be developed as a Home Depot, Lowes or Staples of right. She did not visit the Site as of the date of vesting. After learning that Home Depot was interested in a site located at Kingsland Avenue and Clayer Street, Vogel did not change her opinion that the that Site was not desirable for use as a big box retailer. She further testified that she did not believe that Home Depot's option for that site was "serious;" she believed that is was a "paper site," i.e., an offer made to tie up the property. She did not believe that Home Depot saw the site when they executed the option and once they did, they were no longer interested.
Vogel acknowledged that big box retailers often build in areas that were industrial at one time. She was familiar with a "destination store," which she described as one to which customers will go, regardless of its location, because they want the goods or services. She agreed that Home Depot is a destination store. Although Vogel did not believe that a sewage plant was an attractive neighbor, she did not notice any smell when she visited the Site.
On redirect, Vogel testified that even if Home Depot was characterized as a "destination store," or "a place that someone might go to," but "not an impulse stop," it does not mean that shoppers would go to the location, or return to it, if the trip was too difficult.
Gary Becker
Becker, a civil engineer, employed by Henderson and Bodwell, LLP, the firm that prepared a report to rebut Wolfe's findings, testified on behalf of the City that he was involved in the design of two Home Depot stores, one in Valley Stream and one in Shirley. Becker opined that the plan depicted on SK-1 would not be acceptable to any big box retailer. More specifically, he testified that he believed that Home Depot would not find the orientation of the entrance, i.e., away from Kingsland Avenue, to be acceptable; that the width of the fire lanes is inadequate; that the store, as constructed pursuant to the sketch, would be below the flood plain and would require additional fill to raise the level; and that the building constructed at the Site would need a pile foundation, which was used when the Home Depot — Hamilton Avenue was constructed, because of the soil type. Becker also testified that that the number of parking spaces that could be provided is inadequate and that it would be impracticable to build another parking lot across the street. In his report, Becker notes that in constructing Home Depot — Hamilton Avenue, an additional 147 parking spaces that it shared with the adjacent Jetro food wholesaler were constructed and that Home Depot — Glendale is adjacent to The Sports Authority, which similarly offers additional parking.
On cross examination, Becker stated that he did not ascertain the requirements for a fire lane that were in effect as of the date of vesting and he did not attempt to contact Home Depot to determine if the orientation of the entrance would be acceptable. He further stated that although Home Depot may desire to have more parking spaces, the number of spaces that could be constructed was in accordance with the zoning requirements. Further, other big box retailers, such as Lowe's or Comp USA, required less parking than did Home Depot.On redirect, Becker testified that when he prepared his report, he had the Home Depot National Edition Design Criteria Manual, dated February 2, 1999 (the Design Manual) in his possession.
Joseph W. Wallwork
Wallwork, a civil engineer, testified on behalf of the City that as the director of project control and chief estimator for Greyhawk, he oversees all of the estimating, scheduling and costs on a project; he has estimated the cost of demolition, site preparation and construction in well over 100 instances. In his report, he addresses the cost of demolition of the existing facilities at the Site and the various options in the Site preparation for further development.
Wallwork first looked at the original bid specifications that the City received for the work done at the entire site for the Newtown Creek project, including the properties formerly owned by Williamsburg Steel and Exxon, in order to determine the scope of the demolition work necessary; the cost of that work was $5,803,292. Wallwork allocated 60% of the work and cost, as apportioned by the City's contractor, to the Mobil Site. He then estimated that the cost of demolition performed by the City for the Site was $3,064,702.38; Greyhawk's estimate for the work was $3,332,100, after deducting the salvage value of the scrap metal, which is more than the City actually paid. If Mobil self-performed the work, Wallwork estimated that the cost would be $2,641,162.38 because the City would incur some costs that a private contractor would not. He further estimated that the salvage value of the metal would be $60 per ton, or approximately $77,000 if it was picked up at the site; if the metal was delivered to the salvage yard, the value would be approximately $106,000.
In his independent estimate of the cost of the work necessary to prepare the Site for construction by bringing it up to contract elevation, Wallwork included the cost of a video, which is required by the City ($10,000); a security guard ($39,549.20); a fire guard, who stands by to insure that no fire starts or, if one does, to act to put it out or to call the proper authorities ($39,549.20); a site surveyor, to lay out grades and verify elevations ($43,253.04); final clean up ($15,000); gas detection ($50,000); maintenance of operations ($15,000); protection of ground water monitoring wells ($4,500); hazardous materials remediation, or segregating unanticipated soil hazards ($100,000); removal of lead paint ($25,000); removal of tank liquid ($95,487.50); removal of sludge ($18,849.60); inspection of tank contents ($2,500); temporary power/lighting ($50,000); temporary fencing ($5,000); temporary water ($5,000); site grading/leveling ($47,045.45); and excavation and backfill ($883,391.73). His report reveals, by way of example, that the removal of 4,320 linear feet of 4 inch piping would require .0245 hours of labor per unit and 86.4 hours for equipment. In estimating the cost of the work to bring the Site up to street elevation, some of the allowances were lowered, since the work "was not quite what the City had specified." Tab 10 of the report reveals the amount of money actually paid by the City; it includes the cost of lead paint and asbestos removal, but reveals that no costs were incurred for hazardous surface liquid or disposal of hazardous waste; Wallwork testified that the City paid no costs for additional liquids.
In addition, Wallwork testified that the cost to bring the Site up the elevation specified by the City, or by .47, feet would be $3,434,587; if the elevation was raised 2.51 feet, or the elevation of the adjacent street, the cost would be $4,369,387. Wallwork also estimated the cost of constructing a parking structure to be $2,006,100. Further, a slab on grade foundation, as provided by Wolfe on SK-1, was estimated to cost $1,385,200, while a pile supported foundation, which Wallwork opined would be necessary at the site, would be $3,069,000. In addition, to raise the elevation above flood level would cost between $2,000,000 and $2,500,000.
On cross examination, Wallwork testified that the cost of demolition would be greater for the City than for an individual. If Mobil were to take down the tanks itself, it would not have to prepare or comply with the 600 pages of specifications that the City prepared. Wallwork had been to the Site on previous occasions, but he did not inspect it for the purpose of preparing his report, nor did he witness any of the ten tanks being taken down; he did not believe that it was necessary to visit the Site, nor did he visit the adjoining tank farm. In preparing his report, Wallwork reviewed plans and specifications, in conjunction with visits to the Site made by his staff, who took pictures and measurements. Wallwork also testified that eight tanks were 95 feet in diameter, while one was 90; they were all less than 35 feet high and the steel used to construct the tanks was one-quarter inch thick, based upon American Petroleum Institute standards, although he did not personally examine the tanks to determine the thickness.
Wallwork's estimate of $1,100,000 to dismantle the tanks is based upon the bid specifications and the payments for the work that the City made. His report indicates that it would take 11 weeks for one person to demolish each tank. For example, to dismantle tank 69, one machine would be rented for 130 hours and 540 hours of labor would be needed. Wallwork did not contact the contractor who actually dismantled the tanks to ascertain how long the demolition work took or the value of the steel removed. Electric power would have to be brought in because the existing power was being demolished.
Doris Silber
Silber, the City's real estate appraiser, testified that after she inspected the Property on November 17, 1997, May 20,1998 and August 15, 1998, she valued it at $24 per square foot, or $6,265,608, in reliance upon four comparable sales in Brooklyn, before making deductions for the cost of environmental clean up and demolition of the existing improvements. Silber was of the opinion that the highest and best use of the Property would be for open parking for heavy materials, open storage and open parking for trucks, which uses would be in conformity with the immediate surrounding area, which she described as industrial. After making those deductions, as estimated by Greyhawk, she valued the Property at $3,625,000. When she inspected the Property, Silber observed that a water sewage plant and a garbage disposal plant were in close proximity and that the Site was improved with storage tanks that were not in use; she smelled garbage when there in 1997.
On cross examination, Silber testified that a concrete wall, a fence with barbed wire and security lights were visible in the pictures that she took of the site in September 1997. She further testified that the Site had good access to major highways. Further, although two of her comparable sales were developed by big box retailers, Silber nonetheless concluded that the highest and best use for the Property would be for parking. In this regard, Silber explained that she believed that the market value of property for industrial use and for big box retail development was "fairly similar" and that she valued the Property for industrial use, including a big box retail store. In this regard, Sibler noted that in 1997, the MTA was looking for large open parcels in which to park their buses and they were in competition with those looking for sites for big box retail stores. Hence, there was a single market. Silber also noted that comparable sale number 2, which was purchased for additional parking, was located in an isolated area, as was comparable sale number 4. Silber chose not to consider comparable sales that were located in Queens because she preferred to stay in Brooklyn. She noted however, that Haims' comparable sales 1, 2, 4 and 5 are closer to the Site than is her comparable sale number 4.
Brain Kaminski
Kaminski testified that from 1998 to 2000, he was employed by Greenberg Farrell Architecture as a site developer; Greenberg Farrell does all of the due diligence and conceptual site plans for Home Depot across the nation. Kaminski worked closely with Home Depot to develop its sites and while he was so employed, he worked on approximately 35 sites a year. At claimant's request, Kaminski inspected the Property on June 2, 2001.
Kaminski opined that he did not agree that Home Depot would not build a store that did not face on the main street, since many of its stores do not. Kaminski explained that when Home Depot decides where it wants to build a store, it contacts Thompson, who prepares sales forecasts for Home Depot. They would then get a map and draw rings on it, which would be called search areas, and they would obtain the demographics of the area. In this regard, Kaminski attended a development meeting in July 2000 when there was a Greenpoint search area that indicated $50,000,000 gross sales per year. An alternate site for the store was the Kingsland Avenue property owned by Mobil. Kaminski opined that Home Depot would not enter into options just to tie up properties. Once the search area material is completed, the information is given to the real estate managers, who go into the area and search for a site. Once a site is found, the information is turned over to a Greenberg-Farrell project manager and that person would do due diligence on the site and prepare a conceptual site plan. Kaminski was part of that team.
Based upon his participation in the site selection process at Home Depot, Kaminski was of the opinion that the six acre Site would be suitable for a prototypical Home Depot, which could be constructed in accordance with the governing zoning regulations. Kaminski was also of the opinion that the number of parking spaces indicated on SK-1 would be acceptable to Home Depot. Moreover, the way that the Site was laid out, it would be easy to attach a parking structure to the store. Whether or not to build a parking deck is a business decision made by Home Depot, who pays for it, and whether a parking deck is added would not have any effect on the sales of the store. In fact, the store located in Secaucus, New Jersey, has a parking deck and has one of the highest gross sales in the country.
In addition, the foundation for a prototypical Home Depot would be a shallow spread footing with a slab on grade, capable of supporting a load of 100 to 150 pounds. In order to construct a store, Kaminski did not believe that it would be necessary to remove the existing concrete slabs, since if they were removed, they would have to be replaced with additional compacted fill. Similarly, the fact that the Property was in a 100 year flood area would have no effect on Home Depot, nor would the fact that there was truck traffic on the adjacent streets make the Site less desirable. In fact, Home Depot believed that it was better to stay out of residential areas, where owners would likely protest the construction. Kaminski also noted that Home Depot's suggested building requirements are not absolute, they are just guidelines, which have been disregarded at particular sites.
On cross examination, the City established that the site plan proposed by Wolfe is not in compliance with the requirements set forth in Home Depot's Design Manual in that the parking spaces are not nine by nineteen feet in size, but are instead eighteen by eight feet six inches. In addition, the Manual requires one parking space per 1,000 square foot of store, while the site plan provided only one space per 3,000 square foot. Finally, the site plan places the store four feet from the property line, while Home Depot typically requires a 60 foot set back. Upon review of SK-1, it appeared that if there was a heavy rain, unless there was drainage or a pump, the rain water could go into the store.
On redirect, Kaminski reiterated that the Home Depot Design Manual sets forth guidelines, not absolute requirements. In fact, Kaminski knew that Home Depot constructed stores that had less than the prescribed number of parking spaces.
Mitchel T. Wolfe
In rebuttal, Wolfe testified that he witnessed the tanks being dismantled. While he was at the site in late 1998, he observed a "boom mounted tractor with a claw on it" punch holes through the tank; then another piece of "equipment with a giant claw" ripped the side off the tank until the tank fell in on itself. Two pieces of equipment were working to take the pieces of steel to a pile and then to crush and cut them into smaller pieces to be put in dumpsters. In the one-half hour that he was at the Site, "a whole side of the tank was down." The steel wall of the tank was about one-half inch thick, with some over lap, because the tanks were riveted, which added to the tonnage.
On cross examination, Wolfe testified that he did know how many days it took to demolish the entire Site; he opined that it would not take more than one-half day to take down a tank, based upon what he observed in one-half hour, since if it took one-half hour to take down 25% of the tank, it would take only four hours to take down the whole tank. Wolfe did not know how long it took to compact the steel and load it into dumpsters. Wolfe estimated that based upon the volume of steel, one tank would fill ten forty-yard dumpsters. Over the course of the half-hour that Wolfe was at the Site, he saw three men working to dismantle the tanks.
Jerome Haims
In rebuttal, Haims testified that he did not agree that there was only one industrial real estate market as of the date of vesting. Instead, the market was multi-tiered due to the need to reuse industrial property that became outmoded. Hence, big box retail stores were being pushed into industrial sites, where they paid a premium for large sites. Haims also did not agree that only comparable sales in Brooklyn should be considered, since Queens is just over the bridge, across Newtown Creek, and would be considered a competitive area; the comparable sales that Haims considered in Queens were as close to the Site as was the Home Depot — Hamilton Avenue.
On cross examination, Haims testified that no big box retail store was built within one-half mile of the Site through 2001. On redirect, Haims noted that Feldman Lumber was located one block away from the Site; typical of lumber yards, much of the stock was stored outside.
Gary Becker
In rebuttal, Becker testified that the concrete slabs on which the petroleum storage tanks were located would have to be removed before installing compacted fill because the slabs were of an indeterminate age; there was no way to determine their structural integrity; since the Site is located on the waterfront, the location is subject to the rise and fall of the tide, so that the slabs were subject to deterioration from exposure to salt water; and use of the slabs could ultimately cause cracking due to settlement.
On cross examination, Becker testified that he did not know if anyone had observed any settlement of the tanks. In response to a question posed by the court, Becker opined that inspection of the slabs to determine their condition would be difficult.
On redirect, Becker further testified that assuming that the slabs were in good condition, the demolition process itself could damage them.
Joseph W. Wallwork
In rebuttal, Wallwork testified that without a complete geotechnical report, it could not be determined if compacted engineer fill would be adequate to support the proposed construction. Wallwork would accordingly recommend a pile foundation, based upon his past experience in the area.
The Parties' Contentions
Relying upon the testimony and evidence adduced during the trial, claimant argues that it established that the highest and best use of the Property would be for a big box retail store, that the Site would be suitable for the construction of a Home Depot, and that a review of its comparable sales support its valuation of the Site.
In opposition to claimant's position, the City argues that the Property cannot be used for a big box retail store for the reasons set forth by Becker and Vogel in their respective reports and as testified to by each during the trial. The City also argues that there is no evidence to support the conclusion that the Property, or any property in the vicinity, had been developed with a big box retail store as of the date of vesting, 1997, or prior to the valuation of the Property in 2006. In this regard, the City notes, in a footnote in its memorandum of law, that although there is some evidence that Home Depot had expressed some interest in the site in 2000, there is no evidence that its initial inquiries were pursued, thereby compelling the conclusion that Home Depot decided that the Site was not suitable for development as a big box retail store.
Hence, claimant's conclusion that the highest and best use would be as a big box retail store is based upon nothing more than the fact that such a development would be legally permissible and physically possible. In addition, the City contends that the comparable sales relied upon by Haims are not really comparable. For example, comparable sale number 1, Home Depot — LIC, is surrounded by other big box retailers, such as Best Buy, Old Navy, Stop Shop, Marshalls and Kids R Us. Similarly, comparable sales number 2, Home Depot — Glendale, and 5, the multiplex theater, are on major streets that are populated by retailers and the neighborhoods through which the major thoroughfares run are more populated. Comparable sale number 6, Costco, is more visible from the highway and enjoys better access. While comparable sale number 4, Home Depot — Flushing, is not directly located in a residential area, nor does it have easy pedestrian access, it has superb visibility, is in an established retail location and is surrounded by many other retailers, so that it is in a perceived retail location. Further, the population density surrounding the Site is lower than that around the comparable sales. Vogel also criticizes Haims' adjustments as improper and opines that he did not account for the negative impact of environmental remediation.
The Parties' Objections to Hearsay
The Parties' Contentions
During the trial, numerous objections were made by both parties on the ground that the evidence offered was hearsay. The City, for example, objected to the introduction of Bradford's testimony and reports because the report stated that:
"Our previous experience has shown that the removal of the tanks, appurtenances, pipelines, manifolds and pumps would be offset by the salvage value of the materials."
The City accordingly contends that since claimant's estimate of the cost of demolition is based on hearsay, it should not be considered and the court should use the City's estimate of demolition costs. More specifically, the City contends that claimant offers no basis for its conclusion, no details with regard to how the tanks would be removed, the quantity of salvagable material, or the value of the salvageable material. Indeed, the trial testimony revealed that this conclusion was based solely upon a conversation between Bradford and Tom Berenz, who did not testify.
Similarly, claimant objected to Vogel's testimony concerning her dealings with lenders with regard to contaminated sites. Claimant also objected to that portion of the report that was based upon conversations with regard to inadequate parking.
The Law
It is well established that:
"An expert is qualified to proffer an opinion if he or she is possessed of the requisite skill, training, education, knowledge or experience from which it can be assumed that the information imparted or the opinion rendered is reliable' ( Matott v Ward, 48 NY2d 455, 459). The competence of an expert in a particular subject may derive from long observation and real world experience, and is not dependent upon formal training or attainment of an academic degree in the subject ( see Price v New York City Hous. Auth., 92 NY2d 553, 559)."
( Miele v American Tobacco Co., 2 AD3d 799, 802). "Expert opinions are admissible on subjects involving professional or scientific knowledge or skill not within the range of ordinary training or intelligence" ( In re Nicole V., 71 NY2d 112, 120, citing People v Cronin, 60 NY2d 430, 432-433; De Long v County of Erie, 60 NY2d 296, 307; Dougherty v Milliken, 163 NY 527, 533).
As is also relevant herein, "the professional reliability exception to the hearsay rule . . . enables an expert witness to provide opinion evidence based on otherwise inadmissible hearsay, provided it is demonstrated to be the type of material commonly relied on in the profession" ( Hinlicky v Dreyfuss, 6 NY3d 636, 648, citing Hambsch v New York City Tr. Auth., 63 NY2d 723, 726). Stated differently, "[t]he general rule that opinion evidence "must be based on facts in the record or personally known to the witness"' is subject to an exception where . . . the opinion is based upon data of a kind accepted in the profession as reliable in forming a professional opinion'" ( Greene v Xerox, 244 AD2d 877, 877-878, lv denied 91 NY2d 809 [internal citations omitted]).
Discussion
Herein, all of the parties' hearsay objections pertain to statements made by experts. In addressing these objections, the court notes that both claimant's experts and the City's experts offer opinions with regard to the value of the Property, the cost of Site preparation, the feasibility of the proposed uses of the Property, etc. In so doing, all rely upon the same underlying information, as for example, comparable sales; the amount paid on other contracts or projects; or the prevailing rates for labor, material and/or equipment, within the context of his or her personal experience. Accordingly, since each expert relied upon identified and professionally accepted outside sources, or derived from his or her own personal knowledge and considerable experience, and was subject to full cross-examination, all such objections are overruled ( see generally Madden v Dake, 30 AD3d 932, 937, citing Hambsch, 63 NY2d at 725-726; Brown v County of Albany, 271 AD2d 819, 820, lv denied 95 NY2d 767; see also Simo v New York City Tr. Auth., 13 AD3d 609, 611 [it is settled and unquestioned law that opinion evidence must be based on facts in the record or personally known to the witness]; Jackson v Chetram, 300 AD2d 446, 447 [opinion evidence must be based on facts in the record or personally known to the witness]).
Indeed, the City itself states, in its post-trial reply memorandum of law, that Wallwork's reliance upon plans, specifications and cost estimates is normal when estimating the cost of demolition. Moreover, expert testimony with regard to the estimated cost of demolition work and/or the value of property, which can only be based upon an opinion formulated after reviewing data with regard to other comparable sales and/or the cost of similar demolition projects, is clearly distinguishable from cases in which an expert has been precluded from testifying about his or her opinion of an X-ray or MRI, unless the films are introduced into evidence, since an expert opinion with regard to value of real property or the cost of site preparation work is not referable to a single document that can be introduced into evidence ( cf. Jemmott v Lazofsky, 5 AD3d 558; Wagman v Bradshaw, 292 AD2d 84).
Condition of the Tanks when Demolished
The City objects to the introduction of that portion of Bradford's testimony wherein he stated that he estimated the cost of dismantling and salvaging tanks that were clean and empty on the ground that it was not established that the tanks were in this condition on the date of vesting. The court finds this objection to be without merit.
In so holding, the court relies upon the testimony of Wallwork, the City's expert, who stated in his report that no costs were incurred by the City to remove liquid hazardous waste or sludge from the Site by the contractor that it hired to demolish the tanks. Accordingly, the City will not permitted to disavow the testimony of its own expert witness, which establishes that the tanks were clean when demolished.
Testimony Regarding the Need for Environmental Remediation
Claimant objected to all references to the cost of remediation of the contamination at the Site, including Vogel's testimony that the Site would not be suited for use as a big box retail store because of the need for extensive environmental remediation, on the ground that such testimony is precluded by the Appellate Division Decision. The court agrees.
The Appellate Division clearly held that "it would be fundamentally unfair' to allow the City to value the property as contaminated for condemnation purposes, and yet still recover the remediation costs" ( 12 AD3d at 83). From this it follows that any testimony suggesting that the value of the Site should be reduced because of the cost of or legal responsibility for the clean-up is precluded pursuant to the decision rendered by the Appellate Division. In this regard, it is noted that although the Appellate Division further held that the Property should be valued "as if remediated," which valuation "takes into account any residual stigma which may attach to real property as a result of the fact that it was previously contaminated," ( id. at 12 AD3d 84), the City offers no such evidence.
Accordingly, all testimony and evidence offered by the City that referred to any diminution in the value of the Site because of its contamination resulting from the petroleum spill is stricken and shall not be considered.
The City's Failure to Produce Draft Reports
The Parties' Contentions
During the trial, claimant demanded the production of a draft report prepared by Vogel and Becker. In response, the City stated that the reports were not available and that even if they were, they would be privileged as work product. Accordingly, claimant argues that an adverse inference should be drawn against the City for its failure to produce these reports, while the City argues that the reports are not discoverable
After reviewing the draft report prepared by Silber, the court determined that it was not inconsistent with the final draft and accordingly held that it was not admissible. The court also denied claimant's demand for the production of Wallwork's internal drafts, which were not turned over to the City.
The Law
It is now well settled that materials prepared for litigation by an appraiser who is not called as a witness are protected from disclosure as attorney work product ( see e.g. Niagara Mohawk Power v Town of Moreau Assessor, 8 AD3d 935, 937, citing Xerox v Town of Webster, 206 AD2d 935, 935; CPLR 3101; accord Hicksville Props. v Board of Assessors, 116 AD2d 717, 718 [unfiled reports used for settlement negotiations and not intended for use at trial generally remain immune from discovery as material prepared solely for litigation pursuant to CPLR 3101]). It is equally well established, however, that where an appraiser relied upon and incorporated information contained in prior appraisals, those prior appraisals are relevant for the purpose of impeachment on cross-examination and, thus, are subject to disclosure ( see e.g. Niagara Mohawk Power, 8 AD3d at 937; Hicksville Props., 116 AD2d at 718).
CPLR 4514 provides that:
"In addition to impeachment in the manner permitted by common law, any party may introduce proof that any witness has made a prior statement inconsistent with his testimony if the statement was made in a writing subscribed by him or was made under oath."
"This Court has implicitly recognized that a prior appraisal, prepared by the same expert' is material and relevant to the computation of a claimant's damages upon condemnation ( Gerosa Inc. v State of New York, 180 AD2d 552, 553). Also, as the Appellate Division, Fourth Department, observed in Brummer v State of New York ( 25 AD2d 245, 247), a party should not be permitted to obtain more than one appraisal and then use only the lower or lowest and withhold the other or others.'"
( CMRC v State, 270 AD2d 27, 29 [2000]).
Hence, it has been held that the court did not err in admitting an earlier appraisal report on the subject property prepared by another member of the appraisal firm in which petitioner's expert witness was employed, since the earlier report may be used, at the court's discretion, to impeach the witness' credibility as a prior inconsistent statement ( see e.g. Carriage House Motor Inn v Watertown, 136 AD2d 895, 896, affd 72 NY2d 990; accord Hicksville Props., 116 AD2d at 718 [where an unfiled appraisal report was prepared by a party's trial expert and is inconsistent with his trial testimony, the unfiled report may be introduced into evidence for impeachment purposes and used to cross-examine the witness]).
"[W]here an adversary withholds evidence in his possession or control that would be likely to support his version of the case, the strongest inferences may be drawn against him which the opposing evidence in the record permits" ( Noce v Kaufman, 2 NY2d 347, 353, citing Perlman v Shanck, 192 AppDiv 179; Milio v Railway Motor Trucking Co., 257 AppDiv 640; Borman v Henry Phipps Estates, 260 AppDiv 657; accord Gryphon Dom. VI v APP Intl. Fin. Co., 18 AD3d 286 [an adverse inference could be drawn from plaintiffs' failure to produce their own account statements, which documents were within their control]; Esterces Assocs. v Coastal Communs., 271 AD2d 286, 286-287 [the special referee properly drew an adverse inference against defendant where the referee reasonably assumed that defendant was more likely than plaintiff to have records evidencing payment and defendant failed to produce such records]; Fitzgerald v Tamola, 199 AD2d 122, 123 [where an adversary withholds evidence in his control that would be likely to support his version of the case, the strongest inferences against him which the opposing evidence permits may be drawn]).
Discussion
The above discussion of controlling case law compels the conclusion that either party is entitled to the production of a prior draft report prepared by an appraiser if the appraiser testifies at trial. In so holding, the court rejects the City's assertion that there is only one final report, and that all others are not admissible as drafts, since such a holding would preclude reliance upon earlier reports for impeachment purposes, a finding not supported by the above discussed cases ( see generally Town of Mamakating v New York State Bd. of Real Prop. Servs., 246 AD2d 844, 845 [turn around documents, as opposed to any handwritten notes that may have been inscribed thereon by the appraisers, should be produced]).
Further, there is no basis to conclude that a different result should be reached when considering the reports prepared by experts other than appraisers, since the testimony of all witnesses is subject to impeachment. Claimant is not, however, entitled to the production of the experts' notes, since such disclosure "would constitute an impermissible inquiry into the formulae and mental processes employed by the assessors in arriving at their determinations" ( Amsterdam by Water Commrs Water Dept. v Board of Assessors, 91 AD2d 809, 809 [citations omitted]; accord Town of Mamakating, 246 AD2d at 845 [petitioner was not entitled to prehearing disclosure of the thought processes underlying the appraisers' valuation of any particular parcel]; ALCOA v Board of Assessors, 238 AD2d 858, 860 [discovery going directly to the processes and formula used to arrive at the final assessment is generally recognized to be beyond the scope of disclosure]).
Accordingly, in view of the City's refusal and/or inability to produce the draft reports prepared by Vogel and Becker and reviewed by it, the court agrees with claimant's contention that it is entitled to an adverse inference.
It is also noted that during the trial, the court granted Mobil's objection and denied the City's request to use a previous appraisal report prepared by Haims' firm for a tax certiorari proceeding for the purpose of impeaching Haims. In so holding, the court relied upon the fact that the appraisal concerned another parcel of property, the Brooklyn Union Gas Company site, which was approximately one mile away; was 117 acres in size, which is far more than the 5.995 at issue herein; had no internal roads; would probably require the sale and development of the site in phases, over several years; and access and egress from the nearby Brooklyn-Queens expressway would be extremely difficult, especially during rush hours, since the street pattern was never designed to accommodate high traffic volume. Hence, since the site was so dissimilar to the property at issue herein, the conclusion that that property could not be developed for use as a big box retail store was not relevant to a determination of whether the subject Property could be so developed.
The Remaining Evidentiary Objections
The City objected to claimant's introduction of Exhibit G, the conceptual site plan for a Home Depot proposed for the site located on Kingsland Avenue and Calyer Street, into evidence. Inasmuch as claimant withdrew its offer, all references and testimony with regard to Exhibit G are stricken. All remaining objections are lacking in merit and are overruled.
Just Compensation
"A condemnation proceeding is not a private litigation. There is a constitutional mandate upon the court to give just and fair compensation for property taken. This means just to the claimant and just to the people who are required to pay for it'" ( Yaphank Dev. Co. v County of Suffolk, 203 AD2d 280, 282, quoting Micali Cadillac-Oldsmobile v State of New York [Reiss], 104 AD2d 477, 481, appeal dismissed 64 NY2d 646, quoting Matter of County of Nassau, 43 AD2d 45, 48; see also County of Suffolk v Kalimnios, 275 AD2d 455, affd Colony Beach Club v County of Nassau, 39 NY2d 958 [a property owner must be paid just and fair compensation for any property taken by exercise of the power of eminent domain]).
It is well settled that the measure of damages is fixed as of the date of the taking of the subject property ( Saratoga Water Servs. v Saratoga County Water Auth., 83 NY2d 205; City of Newburgh v Kirchner, 234 AD2d 364; Gold-Mark 35 Assocs. v State, 210 AD2d 377). The measure of just compensation is the fair market value of the property taken ( Matter of Town of Islip [Mascioli], 49 NY2d 354; Rochester Urban Renewal Agency v Willsea Works, 48 NY2d 694; Breitenstein v State, 245 AD2d 837 ), which essentially is a question of fact ( see e.g. W. T. Grant Co. v Srogi, 52 NY2d 496).
As is also relevant herein, "[t]he general rule is that when land is taken in eminent domain, its owner is to be compensated for the market value of the property in its highest and best use" ( In re County of Suffolk, 47 NY2d 507, 511, citing Matter of Rochester Urban Renewal Agency [Patchen Post], 45 NY2d 1). "Ordinarily the potential uses the court may consider in determining value are limited to those uses permitted by the zoning regulations at the time of taking" ( Matter of Town of Islip [Mascioli], 49 NY2d 354, citing 4 Nichols, Eminent Domain [3d ed], § 12.322).
It is equally well settled, however, that "[t]he determination of highest and best use must be based upon evidence of a use which reasonably could or would he made of the property in the near future" ( Yaphank Dev. Co., 203 AD2d at 281, citing Matter of City of New York [Broadway Cary], 34 NY2d 535, 536, reh denied 34 NY2d 916; Matter of Consolidated Edison Co. v Neptune Assocs., 190 AD2d 669, 670; Zappavigna v State of New York, 186 AD2d 557, 561), "regardless of whether the condemnee is so using the property at the time" ( 627 Smith St. v Bureau of Waste Disposal, 289 AD2d 472, 473, appeal dismissed 98 NY2d 646, appeal denied 98 NY2d 611; accord County of Suffolk v Firester, 37 NY2d 649, 652; In re the Acquisition of Real Property by the County of Clinton, 204 AD2d 898). "A use which is no more than a speculative or hypothetical arrangement in the mind of the claimant may not be accepted as the basis for an award'" ( HBP Assocs. v County of Orange, 277 AD2d 237), quoting Matter of City of New York [Shorefront High School-Rudnick], 25 NY2d 146, 149; Matter of City of New York [Broadway Cary], 34 NY2d at 536)."[T]he condemnee has the burden of proving the highest and best use of the condemned property" ( In re New York, 61 NY2d 843, 845, citing Matter of City of New York [Franklin Record Center], 59 NY2d 57, 63; Heyert v Orange Rockland Utils., 17 NY2d 352, 362; accord IIT Realty v State, 120 AD2d 706). As is also of particular relevance herein:
"While it is not essential to demonstrate either that the property had been used as its projected highest and best use or that there had been an ante litem plan for such use ( Keator v State of New York, 23 N Y 2d 337, 339), it is, of course, necessary to show that there is a reasonable probability that its asserted use could or would have been made within the reasonably near future ( Matter of City of New York [Wilson], 21 AD2d 652, 653, affd 16 N Y 2d 814)"
( Matter of City New York [Broadway Cary], 34 NY2d at 536).
Further, the use of comparable sales in valuing real estate, the method employed by the parties herein, is an approved evaluation method for real property ( see Matter of City of New York [Broadway Cary], 34 NY2d 535; Freiberger v State, 33 AD2d 619, citing Village of Lawrence v Greenwood, 300 NY 231, 237).
"With respect to the comparable sales method, market value may be determined with evidence of recent sales of comparable properties' ( Matter of General Elec. Co. v Town of Salina, 69 NY2d 730, 731). . . . By its very definition, a comparable sale need not be identical to the subject property. A comparable sale need only be sufficiently similar to serve as a guide to the market value of the [subject] complex, notwithstanding differences between these comparables and the [subject] property' ( Matter of General Elec. Co. v Town of Salina, 69 NY2d, at 732, supra; Matter of Great Atl. Pac. Tea Co. v Kiernan, 42 NY2d, at 247). In fact, and in accordance with the substantial evidence standard, sound theory and objective data' may be used to adjust evidence of sales of comparable properties in order to more accurately reflect the market value of the subject property. Even evidence of past sales may need adjustment in light of any changes which may have taken place in the market for the property."
( FMC [Peroxygen Chemical Div.] v Unmack, 92 NY2d 179, 189). "Differences between the subject property and alleged comparables are the proper subject of adjustment by expert witnesses, and the degree of comparability becomes a question of fact" ( Martin v State, 33 AD2d 599, 600, citing Kastelic v State of New York, 29 AD2d 803). The failure of an expert to give a dollar and cents adjustment in any instance between the comparable and the subject land or the failure to give a breakdown or to state the factors which entered into the valuation affords no basis for review, and it is insufficient to justify an award ( Geffen Motors v State, 33 AD2d 980).
In addition, it is within the court's discretion to accept or reject expert testimony in determining the value of condemned property ( see e.g. In re CNG Transmission, 273 AD2d 726, 728, citing Matter of Albany County Airport Auth. [Buhrmaster], 265 AD2d 720, 722, lv denied 94 NY2d 758; Matter of Adirondack Hydro Dev. [Warrensburg Bd. Paper], 205 AD2d 925, 926). "The suitability of comparable sales, absent legal error, is a matter for resolution by the trial court" ( Matter of City of New York, 98 AD2d 166, 190, citing Yonkers Rlty. Assoc. v State of New York, 52 AD2d 1014, 1015; Sapia v State of New York, 33 AD2d 821; Argersinger v State of New York, 32 AD2d 708, 709). It has been repeatedly held, however, that "[i]n determining an award to an owner of condemned property, the findings must be either within the range of the expert testimony or be supported by other evidence and adequately explained by the court'" ( Town of Islip v Mustamed Assocs., 222 AD2d 682, 682 [citations omitted]; accord Madowitz v State, 288 AD2d 442; Estate of Dresner v State, 262 AD2d 274, 275).
Highest and Best Use
Herein, it is not disputed that the Property could be developed as a big box retail store in accordance with the existing zoning regulations, as a matter of right. Further, Wolfe's sketch, SK-1, places a big box retail store that complies with the then existing zoning regulations on the Site. Hence, claimant was not required to provide any proof with regard to whether the approvals necessary to construct a big box retail store could be obtained ( see generally Thompson v Erie County Indus. Dev. Agency, 251 AD2d 1026, 1027 [the court rejected claimant's contention that the highest and best use of the subject property was to subdivide it into four residential lots, since subdivision was not reasonably probable where subdividing was not physically possible under the zoning regulations and would result in a lot line running through the existing dwelling]; Pritchard v Ontario County Indus. Dev. Agency, 248 AD2d 974, 974-975, appeal denied 92 NY2d 803 [because claimants failed to demonstrate a reasonable probability, rather than a mere hypothetical possibility, that the parcel could be used for industrial, commercial, office and airport related uses within the foreseeable future, the court properly disregarded claimants' highest and best use determination]; Zappavigna, 186 AD2d at 561 [since condemnation awards are based upon the highest and best use of the property and the record indicated that claimant obtained preliminary approval for his subdivision plan, it was reasonably probable that the subject property would or could be used as a residential subdivision in the near future, since claimant was all but assured of obtaining final approval]).
Further, Kaminski's testimony establishes that the Site would be acceptable to Home Depot for the construction of a store. His testimony, along with that of Haims, establishes that Home Depot was looking for sites for its stores in the Brooklyn area at the time of vesting. Kaminski further testified that the criteria set forth in Home Depot's Design Manual provided guidelines that were not mandatory. Although Vogel testified that a big box retail store would not be developed at the Site, the court finds Kaminski's testimony to be more credible. In so holding, the court notes that Kaminski had actual experience working with Home Depot in developing approximately 70 sites during the two years that he was employed by Greenberg Farrell. In contrast, Vogel's testimony reveals that her experience with big box retailers, which she described as stores having 30,000 square feet or more, was limited to two grocery stores and Urban Outfitters, a 26,000 square foot retailer. Accordingly, she has no experience with retailers who build and operate stores comparable in size to Home Depot and no experience or dealings with Home Depot. Further, the evidence establishes that Home Depot had acquired an option to lease or purchase property across the street from the Site. In addition, it appears that the need to incur additional expenses to develop stores in chosen sites was not an absolute deterrent to Home Depot, since it opted to construct a store with a pile foundation and a parking deck when it constructed Home Depot — Hamilton Avenue and it constructed Home Depot — Flushing in an area that had flooding problems and where it was necessary to obtain variances to construct access roads.
The court also rejects the City's contention that the fact that Home Depot did not construct a store in the immediate vicinity compels the conclusion that such a use cannot be considered to be the highest and best. In this regard, the above discussed case law establishes that a claimant need not establish that a proposed use had been made of the property in order to be entitled to receive compensation based on the use. In addition, the court finds Haims' testimony that had the enlarged sewer plant not been developed in the area, the neighborhood would have been completely different, to be credible. Moreover, although the City now argues that the highest and best use of the Property is for open storage or parking, two of the properties that it relies upon as comparable sales were developed as big box retail stores, i.e, the Home Depot — Hamilton Avenue and Costco.
Hence, the court finds that the highest and best use of the Property was for big box retail use, as is supported by testimony of claimant's experts, the comparable sales relied upon by claimant and by the City and the fact that such use was permitted by the current zoning classification of the Property. Thus, the record establishes that use as a big box retail store "reasonably could or would be made of [the property] in the near future'" and was not merely "a speculative or hypothetical arrangement in the mind of the claimant'" ( In re City of Syracuse Indus. Dev. Agency, 20 AD3d 168, 170-171, quoting Matter of City of New York v Jamaica Arms Hotel, 14 AD3d 699, 700, quoting Matter of HBP Assoc., 277 AD2d at 237). The court further notes that the adverse inference created by the City's failure to produce earlier reports prepared by Becker and Vogel supports this conclusion.
Valuation
Having determined that the highest and best use of the Property is for development as a big box retail store, it follows that the comparable sales that were so developed would better indicate the value of the Site. Accordingly, the court will not consider claimant's comparable sale number 5, which was developed as a multiplex theater. Similarly, the City's comparable sale number 2, which was used for additional parking for an exiting tenant or owner, and comparable sale number 4, which was used for a waste transfer station, will not be further considered. In declining to afford any weight to the City's comparable sales number 2 and 4, the court also notes that these two sites are located in isolated areas, and hence are dissimilar to the Site for this reason as well.
The court is accordingly left with five comparable sale upon which to rely, which the parties value as follows:
In reviewing these comparable sales, the court declines to afford any weight to claimant's comparable sale number 4, Home Depot — Flushing in valuing the property, since the contract for that purchase was signed almost five years before the date of vesting herein and the sale is not adjusted for time. In this regard, the court finds Haims' conclusory and unsupported assertion that no adjustment for time was necessary because the industrial market was stable throughout the period to be unpersuasive, particularly in view of the testimony with regard to the increasing trend of building big box retail stores in industrial areas. The court therefore accepts the City's adjustment of 5% per year for time to be more appropriate.
As discussed above, however, the court finds the inclusion of this comparable sale to be credible in addressing the issue of the condition of property that Home Depot purchases for the construction of its stores.
Inasmuch as the City's earliest comparable sale took place on January 16, 1996, or three years before the sale of Home Depot — Flushing, applying the City's 5% adjustment to the sale of Home Depot — Flushing would be without basis.
With regard to Haims' comparable sale number 2, the court will consider both the adjusted sale price of $61.91 for the sale that occurred in July 1997 and the adjusted sale price of $79.14 for the comparable sale that occurred in September 1999, giving more weight to the 1997 sale, which is closer in time to the date of vesting. In this regard, it is also noted that the cost per square foot of the property is the highest of Haims' comparable sales; Haims, however, does not address the issue of whether Home Depot's subsequent purchase of an additional parcel and the resulting assemblage contributed to this increased value. Similarly, the court finds that the Costco sale, which was 20 months before the date of vesting, is also less persuasive evidence of value than the sales that are closer in time.
Further, the court agrees with Haims' conclusion that the comparable sales need not be adjusted because they were located in superior flood zones. In this regard, Kaminski testified that the fact that a site might flood would not deter Home Depot from purchasing it. In addition, Haims testified that based upon his personal knowledge, comparable sale number 4, Home Depot — Flushing, had flooding problems. Hence, while addressing the problem of possible flooding may impact upon the cost of construction, it does not appear to influence Home Depot's decision to build.
Accordingly, in determining the value of the Property, the court relies upon the following comparable sales, as adjusted for time at the rate of 5% per year, and with the adjustment for flood zone designation omitted:
Location Date Time Adjustments Adjusted Price per SF Price per SF Claimant: The City:
Unadjusted Demolition Home Depot LIC 10/1/97 $49.51 — -10% — $44.56 Home Depot Glendale 7/17/97 45.55 2 months 45.93 25% $4.98 62.39 Home Depot Glendale 9/29/99 59.33 24 months 53.39 25% 4.98 71.72 Home Depot Hamilton 3/27/97 24.38 6 months 24.99 5% — 26.24 Avenue Costco 1/16/96 29.72 20 months 32.20 — — 32.20 Costco 1/16/96 29.88 20 months 32.37 -5% — 30.75 3/27/97 24.38 6 months 24.99 5% — 26.24Of these sales, the court further finds that the most weight should be given to Home Depot — Hamilton Avenue, valued by both claimant and the City at $26.24, as adjusted above. In this regard, this comparable sale is most similar to the Site in that a parking deck was erected there to increase the amount of parking, an option that both parties admit would be a possibility for the Site, had it been acquired by Home Depot. In addition, given the nature of the soil at the Site, Home Depot may also have decided that a foundation on piles, the construction chosen at the Hamilton Avenue store, would be preferable. Both of these alternatives would increase the cost of development, and hence arguably would influence the price that Home Depot would be willing to pay for the Property. The court also finds that claimant's comparable sale number 1, Home Depot — LIC, which was valued at $44.56, to be particularly persuasive, since that sale closed two weeks after the date of vesting.
Hence, the mean of claimant's sales is $47.42 and the median is $44.56. The City's sales have both a mean and a median of $28.50. Accordingly, giving the sales of Home Depot — Hamilton and Home Depot — LIC the most weight, the court values the Site at $36.00 per square foot.
Size of the Site
In valuing the Property, the court is next called upon to determine the number of square feet that could be developed. In this regard, claimant contends that the developable area is 261,142.2 square feet, or 5.995 acres times 43,560 square foot per acre. This calculation is based upon the survey prepared by Schneider Engineering, which appears on page 43 of Haims' report. In contrast, the City alleges that the developable area is 261,067 square feet, as in indicated on the acquisition map.
Discussion
Inasmuch as the City fails to offer any basis for the computation of the area of the Site, the court accepts claimant's assertion that the Site is 261,142.2. Accordingly, the Site is valued at $9,401,119.20 ($36 per square foot x 261,142.2).
Claimant's Motion to Preclude Evidence Regarding Site Preparation Costs
As a threshold issue, the court must determine if the cost of demolishing the storage tanks on the Site should be considered in this action.
The Parties' Contentions
In its motion seeking an order precluding the introduction of any evidence at the trial of the cost to demolish the storage tanks on the Property, claimant argues that the City is seeking to recover $2.89 million dollars in the Navigation Law Action for the cost of the demolition. Hence, allowing the City to reduce the compensation to claimant by the cost of demolition could result in a double recovery. Moreover, the Appellate Division Decision held that the Property should be valued as if remediated,' so that the introduction of evidence on the cost of demolition of the oil tanks would be contrary to this holding.
In opposition, the City argues that since claimant's motion is one that is seeking what is, in effect, summary judgment, it should be denied as untimely, since it was not made in accordance with the Court Rules. In the alternative, the City contends that the motion is without merit, since the City is not seeking to recover damages for the removal of the storage tanks in the Navigation Law Action.
Discussion
Having reserved decision on the motion pending completion of the trial, the City's contention that claimant's motion should be treated as one seeking summary judgment and denied as untimely has been rendered moot.
Turning to the merits, as discussed above, Wallwork testified that the City did not incur any costs to remove liquid hazardous materials or sludge from the tanks when the demolition work at the Site was performed. Accordingly, the court finds that the removal of the tanks is not remediation of the petroleum spill, which would be recoverable in the Navigation Law Action. Instead, the removal of the tanks shall be considered a site preparation cost, as was the demolition of the existing warehouse and bakery in claimant's comparable sales.
In so holding, the court also suggests that in the event that the City seeks to recover such costs in the Navigation Law Action, it would be preluded on the grounds of collateral estoppel and/or because such an award would allow the City a double recovery.
Demolition Costs
The Parties' Contentions
As the above evidence and testimony reveals, claimant alleges that there would be no cost to demolish the existing oil tanks, since the salvage cost of the scrap metal would be sufficient to entice a salvage contractor to dismantle the tanks in exchange for the salvage value. Hence the cost to demolish the existing structures would be $12,400, plus general conditions of 5% ($620), plus profit and overhead of 10% ($1,240), for a total of $14,260.In contrast, Wallwork concludes that the cost of demolition would be $2,641,162, based upon his independent cost analysis and his careful review of the work that was actually done when the tanks were demolished after the City acquired the Property, adjusting the cost to reflect costs that would not be incurred by Mobil, if it performed the work itself or hired a private contractor.
Discussion
The court first notes that claimant's expert, Bradford, has extensive experience in the oil industry, maintaining and operating tank farms; he estimated the replacement cost of a refinery in St. Croix after it was destroyed by Hurricane Hugo. In contrast, Wallwork has no specific experience with the oil industry or tank farms. Hence, Bradford's opinion and testimony is found to be more persuasive because of his more specialized experience.
Further, the court finds Wallwork's analysis of the costs that would be incurred in the demolition of the structures on the Site to be unpersuasive. As a threshold issue, Wallwork's inclusion of three estimates, i.e., the cost to bring the Site to contract elevation as required by the City; the cost to bring the Site to the elevation of the adjacent street; and the cost to bring the Site to the contract elevation as required by the City, with the work performed by Mobil, unnecessarily complicates his analysis. In addition, Wallwork offers no persuasive explanation for the variation of fixed costs between the his estimates.
For example, when asked to explain why the cost of temporary electricity would be $50,000 if the Site was brought to contract grade and $10,000 if the Site was brought to the grade of the adjacent street, Wallwork replied:
"The ten thousand dollars we felt was more realistic under this scenario because there is less facilities that we believe would be on the site because the site would have to be raised up from its current elevation to the street elevation."
It is difficult to understand why increasing the elevation of the Site to the level of the street would have any effect on the cost of electricity necessary for demolition.
In addition, a review of the costs included in Wallwork's estimates compels the conclusion that a number of these costs would not be incurred by Mobil or by a private contractor hired by it or, if they were, the estimated costs are excessive. For example, it is unlikely that $10,000 would be expended to make a video tape, $5,000 for temporary water, $50,000 for temporary power and security lighting, $39,549.20 for a security guard, $39,549,20 for a fire guard, $43,253.04 for a site surveyor, $50,000 for gas detection, $15,000 for maintenance of operations, $100,000 for remediation of hazardous materials, $95,487.50 for the removal of tank liquid, $18,849.60 for the removal of sludge or $2,500 to inspect the tank contents. In fact, Wallwork's testified that Exhibit 10 of his report indicates that the City did not expend any money for maintenance of operations, hazardous surface liquid or the disposal of other hazardous materials. In addition, since the Site had been an operating storage facility for Mobil, it presumably had both water and electricity; Wallwork offers no reasonable explanation with regard to why temporary water would cost $5,000 and temporary electricity would cost $50,000, particularly since the Site already had power and security lights. In this regard, Wallwork's conclusion that temporary electric service would have to be provided because the service was being demolished is unconvincing. Further, the Site was already surrounded by an 8 foot concrete wall and fencing, so the need for temporary fencing at the cost of $5,000 is similarly questionable.
The remaining discussion focuses only the estimated cost to raise the Site to contract elevation, although the court notes that many of the items in both estimates are similar.
With regard to this expense, a review of the City's bid specifications indicates that "maintenance of operations" refers to the remediation system that was then operating and states that "Mobil Oil Corporation, and Exxon are currently responsible for the operations and maintenance of these respective systems" (City's Exhibit 6, Newtown Creek Water Pollution Control Plant — Plant Upgrade, Vol 2, p 46), so that the cost would not be incurred by the contractor. In the alternative, since these costs refer to the continuing remediation efforts, inclusion of this cost as damages in this action is precluded by the Appellate Division Decision.
More significantly, there appears to be little, if any, correlation between the estimate to bring the Site up to contract elevation and Wallwork's final estimate of the cost of $2,641,162.38 if Mobil "self-performed" the work, as the following summary of Wallwork's testimony and reports illustrates:
Increase in Contract Item 1E Work up to Contract Grade Cost
This includes $1,500 for weather protection and $1,500 for site protection.
An additional $39,549 is included for a fire guard.
This includes $18,000 allegedly paid to Con Ed.
This includes $475,000 for concrete wall and foundations, $1,100,000 for storage tank removal and $160,000 for piping demolition.
This figure includes the cost of demolishing and removing the pipes, supports, tanks, fence and concrete foundations.
Morever, Wallwork offers no explanation for the differences. In this regard, it must also be noted that none of the costs listed on the Mobil self-performed schedule are documented, nor is any back-up data included. For example, Wallwork fails to explain why it was necessary to incur a cost of $49,820 to stockpile soil or $31,952 as an increase in Contract Item 1E. Further, a number of these of costs appear to be grossly inflated, even when compared with Wallwork's independent estimate of the cost to raise the elevation of the Site to the level of the street. For example, the cost of fencing is listed as $88,200, while the estimate was $5,000; the cost of electricity is $154,800, while the estimate was $50,000; and the cost of demolition is $1,735,000, while the estimate was $1,056,798, or a total increase of $866,202 for these expenses.
In addition, Wallwork bases his estimate of cost of demolition upon the conclusion offered by the City's contractor that the Mobil Site accounted for 60% of the cost incurred in preparing the entire site, including the property previously owned by Williamsburg Steel and Exxon. This conclusion is premised upon a seven line break down of costs that was submitted by the City's contractor and is similarly not explained or substantiated in any way. Wallwork apparently made no effort to compare the three sites or to quantify the work that needed to be done on each to determine if this allocation was appropriate.
Further, the court finds that Wallwork's estimate that the demolition work would require 10 months is conclusory and lacking in support. His conclusion is seriously called into question by the fact that he did not observe the process of tank removal and in fact, did not even visit the Site. In contrast, Wolfe testified that he observed a one-quarter to one-half section of a tank being removed in approximately one-half hour, with three workers on the Site. Hence, demolition of the entire tank would not likely take those three employees more than one day. Utilizing Wallwork's estimate, which was based upon one employee working, and multiplying it by three to account for the presence of three workers, it would not take more than three days to remove the tank, or a total of 30 days to remove all 10 tanks. From this it follows that Wallwork's estimate of 10 months to demolish the tanks is both lacking in factual support and excessive.
A review of Wallwork's cost estimates also reveals that the number of hours of labor necessary to remove a tank far exceeds the number of hours for which equipment would be needed. For example, to remove tank no. 69, the cost of labor is estimated to be $55.04 per hour, or $29,720.17, for a total of approximately 540 hours, while 130 hours of equipment time would be necessary. In view of the nature and description of the removal process as offered by Bradford, Wolfe and Wallwork, where the employees would be using heavy equipment to cut, crush and carry the scrap metal, Wallwork offers no explanation with regard to what an employee would be doing on the Site if no equipment was being used.
Hence, the court concludes that Wallwork's estimate of the cost of demolition is without merit. In so holding, the court also notes that although the City criticizes claimant's estimate of the time that the work would take because Wolfe was only at the Site for about one to two hours, the City relies upon Wallwork's estimate and testimony, although Wallwork admits that he never personally visited the Site, nor did he observe any of the demolition work being performed. The absence of any more specific testimony with regard to the time that it took or the cost incurred in demolition is also suspect because the City hired the contractor who did the work, for a cost that exceeded $5,000,000. Accordingly, had the City been so inclined, it could have based its estimate of the cost on information supplied by the contractor, who undeniably knew how long the job took, the number of employees utilized, the number of equipment hours needed, etc. Instead, the City opted to based its cost analysis solely upon Wallwork's unsubstantiated estimates.
Similarly, however, the court is not persuaded that a contractor would perform the demolition work without charge because the salvage value of the scrap metal would generate a sufficient profit. In this regard, Wolfe, Bradford, and Wallwork agree that heavy machinery, including hydraulic sheers and trucks, would be necessary to demolish and transport the scrap metal. It is conterintutitive to assume that a contractor would volunteer the use of what is most certainly expensive equipment without charge, even if it was permitted to retain the salvage value of the scrap metal as part of its compensation. Accordingly, since Bradford indicates in his report that a demolition contractor would make a profit of $30 per ton, assuming that the cost of the scrap metal ranged from $100 to $110 per ton, the cost of removing each ton of scrap metal would be approximately $70. In view of the above discussion, the court finds claimant's contention that the cost of the removal of the tanks would be $70 per ton to be more credible than its claim that there would be no cost at all, or the City's claim that the cost of demolition would be $1,100,000, the cost he estimated if Mobil self-performed the work.
It is necessary to determine the weight of the salvaged steel. In his report, Bradford estimated that the scrap metal at the Site would weigh between 2,500 and 3,000 tons. In his report, Wallwork estimated that the scrap metal would weigh approximately 1,000 tons. Again, while Wallwork ostensibly premises his estimate on a schedule of weight, a review of Exhibit 3 to his report reveals that although he offers a breakdown of the weight of the pipes and stairs, his estimate of 2,000,630 pounds, or 1,277 tons for the weight of the tanks is set forth on a single line, without any explanation or calculation. Inasmuch as the vast bulk of the weight of the salvaged metal is attributable to the tanks, this schedule, and hence Wallwork's estimate, is of little probative value. Moreover, Wallwork testified that he did not inspect the tanks in reaching his conclusion, but instead based his calculations of the thickness of the steel upon API guidelines, which indicated that the steel walls of the tank would be one-quarter inch thick. In contrast, claimant's assertion that the thickness of the steel is one-half inch is based upon Wolfe's testimony.
Hence, if the court utilizes Wallwork's estimate that the steel tanks weigh 1,000 tons at one-quarter inch thick, doubling this to reflect a thickness of one-half inch would increase the weight to 2,000 tons. Adding Wallwork's estimate of the weight of the other steel, or 276.84 tons, brings the weight to approximately 2,277 tons. The court therefore finds claimant's estimate of the weight to be 2,500 to 3,000 tons to be more persuasive than Wallwork's estimate and determines that the weight of the scrap metal is 2,500 tons, within the range of claimant's estimate.
Accordingly, the cost of demolition of the existing structures at the Site would be $175,000, or 2,500 tons times $70, with the salvage value of the scrap metal being retained by the demolition contractor as part of his compensation. In addition, the cost of demolishing the masonry buildings and fire walls, or $14,260, as estimated by claimant must be added, for a total of $189,260.
Cost of Necessary Fill
The Parties' Contentions
In support of its position, claimant argues that the testimony of Kaminski establishes that the concrete slabs under the tanks need not be removed and that the cost of the compacted fill necessary to bring the Site up to the grade illustrated in SK-1 is $623,815 in hard costs, plus general conditions (approximately 5%), contractor's overhead and profit (approximately 10%), and permits and inspection fees of $47,000, as determined by Bradford and Gross. It is noted, however, that when the hard cost estimates listed on Gross' and Bradford's report are added, they total only $585,793, which cost shall be utilized in the remainder of this decision. This cost also included $12,400 to remove the masonry buildings, which cost was considered above.
In his estimate, Wallwork includes general conditions of 10%.
In his estimate, Wallwork includes overhead and profit of 21%.
It is not clear if this figure reflects a set amount of money or a percentage of the total cost of the work and it does not appear that Wallwork includes a comparable expense.
The $623,815 inadvertently includes 38,022, the gross site area.
In opposition, the City argues, in reliance upon the report prepared by Becker, that construction as proposed by Wolfe in SK-1 places the structure below flood level, which would result in flooding during heavy rain, so that the grade must be raised an additional 5.55 feet. The City also concludes that the concrete slabs must be removed. Wallwork estimates the cost to raise the grade to be $934,800, which he adds to the $2,41,162 that it would cost Mobil if it self-performed the work done by the City.
Discussion
It must first be noted that although Becker opines that the grade should be raised 5.55 feet above the elevation shown on SK-1, the only cost analysis that the City offers is Wallwork's estimate of the cost to raise the grade to the elevation specified in the City's contract or to the elevation of the adjacent street. Hence, the City offers no evidence of the cost to raise the elevation of the Site to the level specified by Becker.
Further, in arriving at the cost of $934,800 to raise the grade of the Site, although Wallwork does not explain his calculation in his report or his testimony, it appears that he subtracted his estimate of the cost of bringing the Site to the elevation specified in City's contract ($3,434,587) from his estimate of the cost bringing the Site to adjacent street grade ($4,369,387). Having held above, however, that Wallwork's cost estimates are unpersuasive as both conclusory and excessive, the court declines to rely upon these estimates in determining the cost of bringing the Site up to necessary grade for the same reasons. Moreover, although Wallwork estimated that it would cost Mobil only $2,641,162 if it self-performed the work to raise the Site up to the level indicated in the City's contract, in this calculation, he utilized the higher costs of his other two estimates, which results in no self-performed savings being taken into account.
In addition, Wallwork's estimate to bring the elevation up to the level indicated in the City's contract would require 14,968 cubic yards of fill at a cost of $449,040; the text of his report states that 14,891.24 cubic yards of fill would be needed. His estimate indicates that 34,736 cubic tons of fill at a cost of $1,042,080, would be needed to bring the elevation to street level; the text of this report states that 34,658.99 cubic yards of fill would be needed. Again, no explanation of these differentials are offered. Wallwork also includes a cost of $73,683.35 to load and dispose of 10,337 cubic yards of excess fill offsite in both of his estimates. No explanation is offered as to what this cost entails or why fill would be purchased and brought to the Site, only to be removed.
Accordingly, claimant's estimate of $706,402, the estimate of the cost to bring the Site up to the elevation proposed in SK-1, is accepted, i.e., $573,393 ($585,793 minus $12,400 already included in demolition costs), plus general conditions of $28,670 (5% x $573,793), overhead and profit of $57,339 (10% x $573,393), plus $47,000 for permits and inspections.
Although Wallwork also included the cost of constructing a parking deck and a foundation on piles in his report, the testimony establishes that such costs would be incurred by Home Depot. Hence, the deduction of these costs of development as site development costs would be inappropriate.
Conclusion
The Site, which is determined to be 261,142.2 square feet in size, is valued at $36 per square foot, for a total value of $9,401,119. From this, the cost of demolition, $189,260, and the cost to raise the grade, $706,402, must be subtracted, for a total value of $8,505,457. As directed in the Appellate Division Decision, the parties are directed to hold the condemnation award in escrow until the conclusion of the Navigation Law proceeding, so that the proceeds of the condemnation award shall first be utilized to satisfy whatever judgment is recovered in the Navigation Law proceeding ( 12 AD3d at 85).
Settle order on notice.