|Claimant(s):||M EDWARDS REALTY, LLC|
|Claimant short name:||EDWARDS REALTY|
|Footnote (claimant name) :|
|Defendant(s):||THE STATE OF NEW YORK|
|Footnote (defendant name) :|
|Judge:||RENÉE FORGENSI MINARIK|
|Claimant's attorney:||SIDNEY DEVORSETZ, PLLC
BY: BARCLAY DAMON LLP
DEBRA C. SULLIVAN, ESQ.
|Defendant's attorney:||HON. LETITIA JAMES
New York State Attorney General
BY: KEVIN A. GROSSMAN, ESQ.
Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||September 29, 2020|
|See also (multicaptioned case)|
Claimant, M Edwards Realty, LLC, filed claim number 126085 on May 4, 2015, claiming the State's appropriation of its land, pursuant to section 30 of the NYS Highway Law and the Eminent Domain Procedure Law (NYSEDPL), damaged it both directly and indirectly. The Notice of Appropriation with the map and description of the appropriated property was filed with the Cortland County Clerk on October 24, 2014 [Map No. 129 R-1, Parcel 149 (Fee)] (Exhibit 6). I adopt this map and description and incorporate it by reference. The State has complied with the necessary procedures under the NYSEDPL with regard to service. Claimant personally served the Attorney General on April 28, 2015 (Exhibit 3). This claim has not been assigned or submitted to any other court or tribunal for audit or determination (Exhibit 5). I have made the required viewing of the premises.
The parcel is located at 3990 NYS Route 281, Town of Cortlandville, Cortland County (subject property). It is an improved parcel, operating as a used car dealership with automotive services. Michael D. Edwards purchased the property in 1995 and transferred title to M Edwards Realty, LLC on January 31, 2006 (Exhibit 2; Exhibit A, p. 14). The parties agree the valuation date is October 24, 2014 and that the assessed value of the subject property is $220,800.00 (Exhibit 1, p. 7; Exhibit A, p. 5). The parties further agree that the parcel is .605 acres (Exhibit A, p. 7; Exhibit 1, p. 7) or 26,354 square feet, with approximately 219 feet of frontage on Route 281 (Exhibit A, p. 7; Exhibit 1, p. 7), improved by a structure on a concrete slab with a total area of 2,040 square feet, constructed in 1995, with four service bay areas (Exhibit A, p. 49; Exhibit 1, p. 7). Finally, the parties agree that the State appropriated 3,271 square feet of the subject property.
A property owner is entitled to just compensation for land appropriated by the State for public use. The owner is to be "placed in the financial position that he or she would have occupied had the property not been taken (citations omitted). . . . Damages must be measured based upon the fair market value of the property as if it were being put to its highest and best use on the date of the appropriation, whether or not the property was being used in such manner at that time (citations omitted)" (Matter of State of New York [KKS Props., LLC], 119 AD3d 1033, 1034 [3d Dept 2014]).
Mr. Edwards, owner of M Edwards Realty, owns Upstate Auto Center, an independent used car dealership, and has been in the used car business since the "mid-90s." He began his business by leasing a location at the corner of Routes 281 and 222. He concluded that operating a used car business on Route 281, what he referred to as "auto row," would be best for his business, so he purchased the subject property when it came on the market.
Pursuant to the Town of Cortlandville Zoning Code, he applied for a conditional permit requesting vehicle display space for 40 vehicles. Claimant presented a certified copy of the Town's Planning Board minutes for January 31, 1995, approving his conditional permit application for used car sales (Exhibit 9, p. 2). I note these minutes reflect that the plan submitted with the conditional permit application showed 40 vehicle spaces measuring 10' x 20' (Exhibit 9, p. 1). The Town later gave him site plan approval for his business, including permission for the display of up to 40 vehicles for sale, as well as employee and customer parking. I note that no measurements for the parking spaces and/or vehicle display spaces are provided on the Proposed Site Plan (Exhibit 11). Claimant also provided an affidavit from Bruce Weber, Town Planning and Zoning Officer since 1986, stating vehicle display spaces do not have to measure 10' x 20', however, his testimony in affidavit form does not address the conflicting language in the Town's minutes (Exhibit 15). Thus, I am unable to conclusively determine whether or not there was a distinction between vehicles parked for sale and vehicles parked by customers and employees on the subject property.
Mr. Edwards described how the appropriation affected his property. The strip of land appropriated resulted in the alteration of the entrance to the dealership, creating the need for an additional (a fourth) light pole. Further, customer parking had to move from the side of the building to the front of the garage bays. Also, he believes he lost the capacity to display 40 vehicles. In his opinion, the subject property's capacity was reduced by 10 display spaces to 30.
Mr. Edwards also testified that, in addition to the land, the State took the business identification sign and three light poles. The loss of the sign created a problem for customers looking for his dealership and for him when he tried to explain to callers how to locate him. The loss of the lights was also problematic during the winter, when darkness descended at 4:30 or 5:00 p.m., but the dealership was open until 7:00 or 8:00 p.m. National Grid provided temporary lighting to remedy this situation at a cost of $140.00 per month. He testified the State created an even more costly problem when they removed the business identification sign and three light poles by cutting the power lines off at the ground. Mr. Edwards had hoped to pay someone to remove the sign and lights so he could re-install them once the project was complete. Because of the State's actions, he no longer has the original fixtures and structures and the power source is now under the pavement.
Claimant received an estimate from Rapp Signs Inc. for the new business identification sign, which included the sign's fabrication, pole, mount and excavation. Another contractor would install the electrical power supply. The amount for Rapp Signs Inc. was $8,181.00 (Exhibit 7). Tim's Consulting & Troubleshooting provided an estimate to erect four light poles, which included all fixtures, poles, conduit for the new electrical power supply under the pavement and the labor required to run the new electric to the poles as well as the business identification sign in the amount of $24,550.00 (Exhibit 8).
Commercial Real Estate Appraiser Kenneth V. Gardner II testified on behalf of Claimant. He described the Route 281 and Route 13 Corridor (Corridor) as a commercial business corridor with distinct clusters of property sales that occurred between 2000 and 2017. The northern end of the Corridor, depicted at the top of page 19 of Mr. Gardner's appraisal report (Exhibit 1), is the location of the subject property in and around the intersection of Route 281 and Route 222. The State appropriated land in this area in 2014, also known as Phase 2 of the Corridor expansion (tr at 40(1) ). Phase 1 occurred in 2007 and encompassed the area below what is designated as Sale #7 on Exhibit 1, page 19 (tr at 40, 42).
Mr. Gardner described this market area as developed with "major big box retailers" and a variety of other retail users. The area in the immediate vicinity of the subject property has a few major auto dealerships, as well as non-franchise used vehicle dealers and vehicle service facilities (tr at 49-50). He believes the real estate market in the Corridor has been sluggish since 2000 when the NYS Department of Transportation (DOT) began planning to widen the road. DOT's plan received Town of Cortlandville approval in 2006, with Phase 1 construction to commence in 2008 and Phase 2 in 2014 (Exhibit 1, p. 77).
Mr. Gardner opined that, not only was the subject property's location in the Corridor favorable for auto sales, the fact that it had 197 feet of road frontage made this particular parcel even more valuable (tr at 51; Exhibit 1, p. 8). This fact supports his conclusion that the highest and best use for this property in the before and after scenarios is as a vehicle sales and service facility (tr at 52-53). He relied upon the sales comparison and income approaches to value the subject property.
He first established the value of the land as vacant. Mr. Gardner identified 16 sales in the Corridor that occurred between 2000 and 2016. He selected four as the best comparables and determined the land was worth $7.10 per square foot or $187,000.00 before the appropriation (Exhibit 1, pp. 18, 24-25). The State appropriated 3,271 square feet and, relying upon the same comparable sales as in the before scenario, the land as vacant remained $7.10 per square foot. Thus, the value of the subject property was reduced by $23,224.00 [3,271 sq. ft x $7.10] to $164,000.00 (Exhibit 1, p. 54).
Mr. Gardner selected four different sales for his comparable sales analysis for the subject property as improved. While all four sales are considered part of the Corridor, only two are in close proximity to the subject property, that is Phase 2 of the project. He concluded the value before the appropriation was $370,000.00 (Exhibit 1, pp. 37-38). When he applied the income capitalization approach using three leases from the area, he extrapolated a value in the before scenario as $368,000.00 (Exhibit 1, pp. 42, 47). His reconciled value was $370,000.00 (Exhibit 1, p. 48).
After the appropriation, using the same sales as in the before and adjusting for the subject parcel's reduction in land area and vehicle display area, he arrived at a figure of $300,000.00 (Exhibit 1, p. 56). Mr. Gardner also used the same leases in his income approach after the appropriation, making some adjustments based on the loss of vehicle display space, and determined a value of $277,000.00 (Exhibit 1, p. 63). His reconciled value was $290,000.00 (Exhibit 1, p. 64).
E. Anthony Casale testified for Defendant. He determined that the subject property's highest and best use in both the before and after scenarios was commercial (Exhibit A, pp. 57-59). He also fixed a value for the subject property as vacant. Mr. Casale selected for comparison, three sales in Cortlandville, but none were located on Route 281. He determined that the land value was $6.50 per square foot, an approximate total value for the subject property of $171,300.00 before the appropriation (Exhibit A, pp. 61-63, 67). After the appropriation, the subject property remained valued at $6.50 per square foot, based on an analysis of the same sales. Therefore, the State's taking of approximately 3,271 square feet left an after value of the subject property of approximately $150,000.00 as vacant (Exhibit A, p. 110).
Mr. Casale also used the sales comparison and income approaches to value the subject property as improved. He selected four comparable sales in Cortlandville, three of which were on Route 13. He concluded the property was worth $250,000.00 (Exhibit A, p. 80). He then examined five retail leases on Route 281, determined three were the most appropriate, and concluded the value was $243,000.00 (Exhibit A, pp. 81, 90). Mr. Casale reconciled the two approaches and determined the appropriate value was $250,000.00 before the appropriation (Exhibit A, p. 92).
Mr. Casale determined that after the appropriation, the land as vacant still held the value of $6.50 per square foot (Exhibit A, p. 110). Relying on the same comparable sales as in the before scenario, with adjustments for the appropriated land, his land valuation for the subject property in the after aspect was $208,800.00 (Exhibit A, p. 115). Mr. Casale rejected the income capitalization approach in the after scenario as any adjustments regarding the effect of the appropriation on leases would be speculative (Exhibit A, pp. 117-118).
HIGHEST & BEST USE
"A party asserting a highest and best use different from the existing one must establish that it is reasonably probable that the asserted highest and best use could or would have been made of the subject property in the near future. A use which is no more than a speculative or hypothetical arrangement . . . may not be accepted as the basis for an award (citations omitted). [I]t must be shown that [the projected use] is economically as well as physically feasible (citations omitted)" (Matter of Rochester Urban Renewal Agency v Lee, 83 AD2d 770 [4th Dept 1981]; Thompson v Erie County Indus. Dev. Agency, 251 AD2d 1026, 1027 [4th Dept 1998]).
Mr. Casale, as discussed earlier in the decision, determined the subject property's highest and best use as commercial both before and after the appropriation (Exhibit A, pp. 59, 108). No specific detail other than a commercial use "in some form" was discussed. As no projected new use was identified, nor discussion regarding the economic and physical feasibility of a projected new use, I conclude that the highest and best use both before and after the appropriation is Commercial - Automobile Sales and Service.LAND VALUE - DIRECT DAMAGES
Both appraisers performed a comparable sales land valuation using data collected in the area. I relied upon Claimant's sales 2, 7 and 13, as well as the State's sale 2, as they were the sales requiring the least amount of adjustments and were located in the Corridor (Exhibit 1, p. 24; Exhibit A, p. 63). The average value per square foot for the land as vacant based on these four sales as adjusted is $7.11 and I adopt this figure. Thus, the subject property is valued at $187,377.00 before the appropriation [26,354 sq. ft. x $7.11] and $164,120.00 after the State appropriated 3,271 square feet of land [23,083 sq. ft. x $7.11]. Claimant is awarded $23,257.00 in direct damages for the land taken.SITE IMPROVEMENTS - DIRECT DAMAGES
Claimant had been prepared to remove and reinstall his business identification sign and the three light poles, however, the State removed them before Claimant did, resulting in Claimant's inability to reinstall the old equipment. In addition, the appropriation of land necessitated the relocation of the curb cut allowing access to the property from Route 281, creating the need for a fourth light pole. Claimant has been directly damaged by the loss of the original equipment, the need to install a fourth light and the damage to the electric lines that power them. Claimant is awarded $8,181.00 for the new business identification sign (Exhibit 7) and $24,550.00 for the four light poles and the installation of all five structures (Exhibit 8).INDIRECT DAMAGES
Claimant posits he lost valuable real estate when the State appropriated road frontage, reducing his ability to display 40 vehicles for sale as permitted by the Town, to only 30, diminishing the value of his business. While the State does not dispute that vehicle display space was indeed reduced (tr at 146), the State posits Claimant lost only three vehicle display spaces. As discussed earlier in this decision, although the Town was clear that Claimant was permitted to display 40 vehicles, the approved site plan does not depict the location and size of vehicle display spaces. While both parties have made arguments that damages can be assessed on a per space basis, or percentage thereof, I decline to do so because of the conflicting evidence presented.(2)
Indirect damages are measured by the difference between the before and after values, less the land value and the value of the improvements appropriated (Matter of Eagle Cr. Land Resources, LLC [Woodstone Lake Dev., LLC], 149 AD3d 1324, 1326 [3d Dept 2017], lv denied, 29 NY3d 916 ). The best evidence of value is a recent sale of the subject property in an arms-length transaction. Barring that, the comparable sales comparison approach is the preferred option (Matter of Allied Corp. v Town of Camillus, 80 NY2d 351, 356 ). I adopt Claimant's appraiser's sales comparison approach as he used the subject property's highest and best use as a used vehicle dealership both before and after the appropriation. The reconciled value of $370,000.00 (Exhibit 1, p. 38) in the before and the reconciled value of $300,000.00 (Exhibit 1, p. 56) in the after, leave total damages in the amount of $70,000.00.
Land, 3,271 sq. ft. at $7.11/sq. ft. $23,257.00
Site Improvements $8,181.00 + $24,550.00 $32,731.00
Difference in value $70,000.00
less land value ($23,257.00)
less site improvements ($32,731.00)
Total Indirect Damage: $14,012.00
Total Damages Awarded to Claimant: $70,000.00
Therefore, Claimant is entitled to an award of $70,000.00, with statutory interest from the vesting date of October 24, 2014 (date of appropriation) to the date of this decision and thereafter to the date of entry of judgment for the appropriation (see CPLR 5001 and 5002). Suspension of interest is not warranted since the notice of acquisition was not personally served (Sokol v State of New York, 272 AD2d 604 [2d Dept 2000]; see also EDPL 514 [B]).(3)
The award to Claimant herein is exclusive of the claim, if any, of persons other than the owners of the appropriated property, their tenants, mortgagees or lienors having any right or interest in any stream, lake, drainage, irrigation ditch or channel, street, road, highway or public or private right-of-way or the bed thereof within the limits of the appropriated property or contiguous thereto; and is exclusive also of claims, if any, for the value of or damage to easements or appurtenant facilities for construction, operation or maintenance of publicly owned or public service, electric, telephone, telegraph, pipe, water, sewer or railroad lines.
Any motions on which the Court previously reserved or were previously undecided are hereby denied.
It is ordered that, to the extent Claimant has paid a filing fee, it is recoverable pursuant to Court of Claims Act § 11-a (2).
LET JUDGMENT BE ENTERED ACCORDINGLY.
September 29, 2020
Rochester, New York
RENÉE FORGENSI MINARIK
Judge of the Court of Claims
1. References to the trial transcript will be referred to as (tr at page).
2. My award is not based upon the reduction of vehicle display spaces, so I did not rely upon the engineer's report in Exhibit A. Also, I need not determine whether or not Claimant failed to disclose Exhibits 9-11 for the same reason.
3. Interest is suspended from June 6, 2017 through June 26, 2017, pursuant to "So Ordered" Stipulation, Midey, J., filed June 26, 2017.