New York Law Review

Tag: Economic Feasibility

  • Matter of City of New York, 61 N.Y.2d 843 (1984): Establishing Highest and Best Use in Condemnation Proceedings

    Matter of City of New York, 61 N.Y.2d 843 (1984)

    In condemnation proceedings, the condemnee bears the burden of proving the highest and best use of the condemned property, demonstrating a reasonable probability, not merely a possibility, that the proposed use is economically feasible and could be realized in the reasonably near future.

    Summary

    In a dispute over the valuation of condemned land, the Court of Appeals affirmed the Appellate Division’s decision regarding the highest and best use of the property. The city condemned vacant land, and the claimant argued its highest and best use was as a shopping center. The court emphasized that the claimant bears the burden of proving the economic feasibility and realistic probability of the proposed use, not just a hypothetical possibility. The court found the claimant presented sufficient evidence, including a city planning commission determination regarding a nearby property, to support the shopping center use. The dissent argued the claimant failed to demonstrate realistic plans or economic feasibility.

    Facts

    The City of New York condemned vacant land owned by Jomar Real Estate Corp. as part of the Staten Island Industrial Park project. Jomar claimed the highest and best use of the property was for a community shopping center, seeking a higher valuation. Jomar presented aerial photographs, population estimates, and blueprints created after notification of condemnation. They also referenced a City Planning Commission report concerning a different property noting the ability to support commercial space nearby. No formal economic feasibility study was conducted, nor were financing arrangements or construction contracts secured.

    Procedural History

    The trial court determined a value based on a lower and best use than a shopping center. The Appellate Division reversed, finding the highest and best use was for a shopping center, leading to a higher valuation. The City of New York appealed to the Court of Appeals.

    Issue(s)

    Whether the claimant, Jomar Real Estate Corp., met its burden of proving that the highest and best use of the condemned land was for a shopping center.

    Holding

    Yes, because the claimant presented sufficient evidence, including the city planning commission’s determination regarding a nearby property, which tended to establish the economic feasibility of a shopping center use.

    Court’s Reasoning

    The Court of Appeals affirmed the Appellate Division’s order, adopting its reasoning that the claimant had adequately demonstrated the economic feasibility of a shopping center. The court highlighted the claimant’s introduction of the city planning commission’s determination regarding another property on Victory Boulevard, within a half-mile of the subject parcel. This determination indicated the market’s ability to support a significant amount of commercial space, thereby supporting the economic feasibility of a shopping center on the condemned land.

    The dissenting judge argued that the claimant failed to meet the burden of proving a reasonable probability of the shopping center’s development. The dissent emphasized the lack of an economic feasibility study, financing arrangements, construction contracts, or other concrete steps toward development. The dissent argued, “Here, claimant has done little more than raise the hypothetical possibility of a community shopping center and the record is devoid of evidence establishing a reasonable probability that such a use could have or would have been made in the reasonably near future.” The dissent noted that the few actions the claimant took, such as purchasing sewer hookups and leveling the land, were consistent with any development, including the intended industrial park use. The dissent distinguished the other Victory Boulevard property, citing its location at a busier intersection with limited convenience services, making it unsuitable for direct comparison.

    The court’s decision underscores the importance of presenting concrete evidence of economic feasibility and realistic development plans when arguing for a specific highest and best use in condemnation proceedings. Mere speculation or hypothetical possibilities are insufficient to meet the condemnee’s burden of proof.

  • Broadway Cary Corp. v. City of New York, 34 N.Y.2d 535 (1974): Evidence Required to Prove Highest and Best Use in Eminent Domain

    34 N.Y.2d 535 (1974)

    In eminent domain proceedings, a property owner seeking compensation based on a proposed highest and best use of the property must demonstrate a reasonable probability that the asserted use could or would have been made in the reasonably near future, not merely a speculative or hypothetical possibility.

    Summary

    The City of New York condemned property owned by Broadway Cary Corp. for park purposes. Broadway Cary Corp. argued that the highest and best use of the land, which was zoned for light manufacturing, was for a community shopping center and sought compensation based on that use. The Court of Appeals held that Broadway Cary Corp. failed to substantiate this claim because they presented evidence of physical feasibility but not economic feasibility. The court emphasized the need to demonstrate a reasonable probability that the proposed use would occur in the reasonably near future, considering factors like financing, construction costs, and potential profits.

    Facts

    The City of New York initiated condemnation proceedings to acquire real property owned by Broadway Cary Corp. The property was zoned for light manufacturing. Broadway Cary Corp. contended the highest and best use of the property was for a community shopping center. The City presented evidence of value based on comparable sales of adjacent parcels. Broadway Cary Corp. presented evidence only on the physical possibility of erecting a shopping center.

    Procedural History

    The case reached the Court of Appeals after Broadway Cary Corp. sought compensation based on the proposed shopping center use. The lower courts apparently sided with the city’s valuation based on current zoning and comparable sales. The Court of Appeals affirmed the lower court’s determination.

    Issue(s)

    Whether a property owner in an eminent domain proceeding, seeking compensation based on a proposed highest and best use of the property, must demonstrate a reasonable probability that the asserted use could or would have been made in the reasonably near future, or whether evidence of physical feasibility alone is sufficient.

    Holding

    No, because a property owner must show a reasonable probability that the asserted use could or would have been made in the reasonably near future, supported by evidence beyond mere physical feasibility, to justify compensation based on that proposed use in an eminent domain proceeding.

    Court’s Reasoning

    The court emphasized that while it’s not essential to demonstrate 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, it is necessary to show a reasonable probability that the asserted use could or would have been made within the reasonably near future. The court distinguished between a speculative or hypothetical arrangement in the claimant’s mind and a use that has a reasonable probability of occurring. The court cited Matter of City of New York [Shorefront High School — Rudnick], 25 N.Y.2d 146, 149, noting that an expert would likely consider factors like the availability of financing, costs of construction, taxes, and possible profits in determining the highest and best use and probable market price. Broadway Cary Corp.’s evidence only addressed physical feasibility, failing to meet the usual criteria for establishing a reasonable probability of the proposed use. The court effectively requires that evidence of economic feasibility accompany evidence of physical feasibility to support a claim for compensation based on a property’s potential highest and best use.