New York Law Review

Tag: highest and best use

  • McCurdy v. State, 8 N.Y.3d 231 (2007): Damages for Temporary Easements

    McCurdy v. State, 8 N.Y.3d 231 (2007)

    When the state takes a temporary easement, damages are calculated based on the rental value of the land within the easement plus consequential damages for the unencumbered interior acreage only if access was impossible or the easement demonstrably impeded the property’s highest and best use.

    Summary

    McCurdy owned a vacant parcel of land. The State took a temporary easement for highway reconstruction. McCurdy sought damages for the entire rental value of the property for the easement’s duration, arguing it rendered the property undevelopable. The State argued damages should only cover periods of actual access obstruction. The Court of Appeals held that damages should be based on the rental value of the easement area, plus consequential damages (rental value of remainder) only for periods access was impossible, or if McCurdy proved the easement impeded the property’s highest and best use. Since the State proved the limited obstruction, and McCurdy failed to prove impediment to development, the Court remitted for recalculation of damages accordingly.

    Facts

    McCurdy owned a vacant, unimproved parcel of land with frontage on Montauk Highway. The State permanently appropriated a small slice and acquired a temporary easement for grading during highway reconstruction in 1999. The temporary easement covered the entire highway frontage. The easement reserved to the owner the right to use the property, limited only as necessary for construction and maintenance. McCurdy’s appraiser argued the highest and best use was a medical office building, requiring rezoning and a variance. McCurdy’s dental office was on an adjacent lot.

    Procedural History

    McCurdy sued the State in the Court of Claims. The Court of Claims awarded damages based on the rental value of the entire property for the easement’s duration, relying on Matter of Kadlec v State of New York. The Appellate Division affirmed. The Court of Appeals granted the State leave to appeal.

    Issue(s)

    Whether the proper measure of damages for a temporary easement encumbering a vacant parcel’s entire highway frontage is the rental value of the entire parcel for the easement’s duration, or only for the period of actual obstruction, plus consequential damages if the easement demonstrably impeded the property’s highest and best use.

    Holding

    No, because damages should be awarded based on the rental value of the land encompassed within the temporary easement, plus consequential damages representing the rental value of the unencumbered interior acreage for any period of time when highway access was impossible or the condemnee establishes that the mere existence of the temporary easement did, in fact, impede sale or development of the property for its highest and best use.

    Court’s Reasoning

    The Court relied on Village of Highland Falls v. State of New York, which permitted using hindsight to value a temporary easement. Compensation is not required for a temporary easement if there’s no actual interference with the property owner’s use. Here, the State proved access was only obstructed for 7-10 days. The Court acknowledged the “damage to a property owner caused by uncertainty regarding the condemnor’s intentions,” but the easement’s wording reserved claimant’s right of access. McCurdy failed to show the easement interfered with the property’s marketability or development beyond conjecture. He didn’t apply for rezoning, a highway work permit, or a yard-width variance. The court stated, “If the condemnation award is made after the easement has expired, it makes practical sense to compute the property owner’s actual damages rather than indulging in speculation on the measure of damages claimant could have contemplated at the time of taking.” (quoting Village of Highland Falls). There was no evidence McCurdy attempted to sell or develop the property. Therefore, the Court remitted the case for recalculation of damages based on the limited period of actual obstruction.

  • 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.

  • In re City of New York (Franklin Record Center), 51 N.Y.2d 53 (1980): Valuation of Property Based on Actual Rental Income

    In re City of New York (Franklin Record Center), 51 N.Y.2d 53 (1980)

    In condemnation proceedings, the compensation due to a claimant who has uniquely improved their property to command higher rental income is properly measured by capitalizing the actual rental income received, absent evidence that a similar property would have a lower market value.

    Summary

    Franklin Record Center (Franklin) sought compensation after the City of New York condemned its building. Franklin argued that its unique setup for record storage allowed it to charge higher rents than standard loft buildings. Both parties used capitalization of net rental income to value the property, but disagreed on the actual rental income. The City argued that a portion of the payments from tenants were for services, not rent, and valued the building lower. The Court of Appeals held that Franklin’s compensation should be based on the actual rental income received, as the building’s highest and best use was as a record storage facility, and there was no evidence the income was an aberration or that services were included in the rental payments.

    Facts

    Franklin owned a 10-story loft building in Manhattan. The building was leased to approximately 90 tenants for record and office supply storage. Franklin utilized portable metal partitions and shelf space, enabling tenants to rent only the precise area needed. Due to this flexibility, Franklin charged a higher per square foot rental rate than other loft buildings in the area. Most tenants had three- to five-year leases.

    Procedural History

    The City condemned Franklin’s building on June 1, 1970. At the initial Special Term hearing, the court adopted the City’s valuation of $635,000. The Appellate Division reversed, finding Franklin’s use was the building’s highest and best use and remanded the case. On remand, Special Term awarded Franklin $1,100,000 based on the rental income testified to by Franklin’s expert. The City appealed this decree to the Court of Appeals.

    Issue(s)

    Whether the compensation owed to Franklin in condemnation should be based on the actual rental income received from its record storage facility, or on a lower valuation based on the market value of comparable loft buildings.

    Holding

    Yes, because the highest and best use of the property was its actual use as a record storage facility, and the record did not support the conclusion that the tenants were purchasing anything other than the right to occupy space in the building.

    Court’s Reasoning

    The court held that the measure of damages in condemnation is the fair market value of the condemned property in its highest and best use on the date of taking. The court determined that the Appellate Division correctly concluded that the highest and best use of the property was its actual use as a record storage facility and that the entire income from that use was rental income. The city’s expert opinion was based on the incorrect assumption that the building should be valued as a loft building rather than as a record storage building. The court noted that the city’s expert conceded he had never seen the leases and could not testify what services the tenants were getting.

    The court emphasized that “[a]bsent any evidence that services were supplied by Franklin or any related company without the payment of reasonable compensation therefor over and above the rent, Franklin’s experience and reputation and its relationship with the other companies was simply irrelevant to the determination of the compensation to be paid.” The court found no evidence to support the city’s conclusion that a portion of the tenants’ payments constituted payment for services. Therefore, the court concluded that the proper measure of compensation was based on the capitalization of Franklin’s actual rental income. The court distinguished cases where actual receipts were a “temporary aberration.” Here, there was no such claim by the City. The Court affirmed the decree awarding Franklin $1,100,000.

  • In re City of New York (Public School No. 223), 51 N.Y.2d 921 (1980): Valuation of Property in Condemnation Proceedings

    51 N.Y.2d 921 (1980)

    In condemnation proceedings, the valuation of property may consider its highest and best use, including potential governmental financing and zoning changes, provided there is evidentiary support and no contrary proof is offered.

    Summary

    This case concerns the valuation of two parcels of land acquired by the City of New York through condemnation. One parcel was for Public School No. 223, and the other was part of an Urban Renewal Project. The primary issue concerned the valuation of the Public School No. 223 parcel, specifically whether the court properly considered its potential use as a governmentally financed apartment building, including anticipated zoning changes and tax abatements. The Court of Appeals affirmed the lower court’s valuation, finding sufficient evidentiary support for the factual determinations regarding the parcel’s highest and best use. Because the city did not provide proof of the proper discount to apply to the market value of the land, the Court of Appeals affirmed the ruling.

    Facts

    The City of New York initiated condemnation proceedings to acquire two parcels of land: one for Public School No. 223 and another for a Stage II Urban Renewal Project. Regarding the Public School No. 223 parcel, the Supreme Court determined that its highest and best use was for a governmentally financed apartment house. This determination factored in the likelihood of a zoning change and tax abatement. The parties agreed on a land valuation based on this potential use.

    Procedural History

    The Supreme Court made factual determinations regarding the highest and best use of the Public School No. 223 parcel, including the probability of zoning changes and tax abatements. The Appellate Division affirmed these determinations. The City of New York appealed to the Court of Appeals. Regarding the Urban Renewal parcel, the Appellate Division dismissed the City’s appeal due to a failure to file a notice of appeal from the partial final decree of the Supreme Court.

    Issue(s)

    1. Whether the courts below erred in considering the potential use of the Public School No. 223 parcel as a governmentally financed apartment house, including anticipated zoning changes and tax abatements, when determining its valuation in condemnation proceedings.
    2. Whether the Appellate Division properly dismissed the appeal concerning the Urban Renewal parcel due to the City’s failure to file a timely notice of appeal.

    Holding

    1. No, because the factual determinations regarding the parcel’s highest and best use were supported by evidence, and the city failed to provide proof of an appropriate discount given that the rezoning had not been formally accomplished.
    2. Yes, because no notice of appeal from the relevant decree was filed, as required for appellate review.

    Court’s Reasoning

    The Court of Appeals affirmed the lower court’s decision regarding the Public School No. 223 parcel. The court emphasized that the factual determinations made by the Supreme Court regarding the use of the parcel as a governmentally financed apartment house, zoning changes, tax abatement, and governmental financing were affirmed by the Appellate Division and had evidentiary support in the record. These determinations were thus beyond the scope of the Court of Appeals’ review. Although the rezoning had not been formally accomplished at the time of valuation, the court noted that normally, this would call for “at least some discount”. However, the city failed to offer evidence demonstrating what this discount should be. Therefore, the court found no reason to disturb the valuation determined by the lower courts. Regarding the Urban Renewal parcel, the court held that the Appellate Division correctly dismissed the appeal because the City had not filed a notice of appeal from the relevant decree. Because that failure deprives an appellate court of jurisdiction, the lower court was affirmed.

  • In re County of Suffolk, 47 N.Y.2d 507 (1979): Establishing ‘Specialty’ Property Valuation in Eminent Domain

    In re County of Suffolk, 47 N.Y.2d 507 (1979)

    When private property taken by eminent domain qualifies as a ‘specialty’ due to its unique nature and lack of a market, just compensation is determined by the summation method: land value plus replacement cost of improvements, less depreciation.

    Summary

    Suffolk County condemned property owned by the Van Bourgondien family, which had operated a flower-growing nursery for over 50 years. The key issue was how to value the property. The County argued for residential development value, while the owners claimed it was a ‘specialty’ property. The Court of Appeals held that the property qualified as a specialty because of its unique greenhouse complex and the absence of a market for flower-growing businesses in the area. The court affirmed the Appellate Division’s decision to value the property using the summation method, which considers the land value plus the replacement cost of the improvements, less depreciation. This case clarifies the criteria for determining specialty property status in eminent domain cases.

    Facts

    The Van Bourgondien family owned a 19-acre parcel in Suffolk County, zoned for residential use. They operated a wholesale flower-growing nursery with a large greenhouse complex (125,000 sq ft under glass) since 1920. The main residence contained special instruments to monitor greenhouse conditions. The family had prior unsuccessful attempts to rezone the property for multiple residences. At the time of condemnation in 1974, the business was profitable, with increasing gross sales. The County argued the highest and best use was residential development due to high taxes making the flower business unfeasible.

    Procedural History

    The County condemned the property. At Special Term, the court determined the highest and best use was residential development and assigned no value to the greenhouse complex. The Appellate Division modified this ruling, deeming the property a specialty and ordering valuation accordingly. Upon remand, the parties stipulated the reproduction cost less depreciation. The County appealed the amended order to the Court of Appeals.

    Issue(s)

    Whether the Van Bourgondien family’s nursery property qualified as a ‘specialty’ property for valuation purposes in an eminent domain proceeding, thus requiring valuation based on the summation method (land value plus replacement cost less depreciation) rather than market value for residential development.

    Holding

    Yes, the property was a specialty because it met the criteria for uniqueness, special use, lack of a market, and economic appropriateness. Therefore, the summation method was the correct valuation approach.

    Court’s Reasoning

    The Court of Appeals affirmed the Appellate Division’s ruling, emphasizing the constitutional requirement of just compensation for private property taken for public use. The court applied the four-part test for determining whether a property is a specialty, as established in Matter of County of Nassau (Colony Beach Club of Lido), 43 A.D.2d 45 (1973) and refined in Matter of Great Atlantic & Pacific Tea Co. v Kiernan, 42 N.Y.2d 236 (1977). The court found that the greenhouses were unique and specially built for growing plants and flowers, constituting a unique structure adapted to the business conducted. The property was actively used for its specialized purpose. Crucially, there was no market for the property as a whole for flower-growing businesses in western Suffolk, as other such properties had been converted to residential use. Finally, the business was economically feasible and not outmoded at the time of the taking. The court distinguished Colony Beach Club, noting that the beach club property was underutilized and surrounded by single-family residences, making its commercial use inappropriate. Here, the flower business was profitable and on the upswing. The Court stated, “a specialty may perhaps be best defined as a structure which is uniquely adapted to the business conducted upon it or use made of it and cannot be converted to other uses without the expenditure of substantial sums of money”. The Court also held that the main residence was an integral part of the nursery complex and properly valued as part of the specialty, and the greenhouses qualified as compensable fixtures because they were annexed to the land with the intention of permanence and would lose substantial value if removed. Ultimately, the court concluded that all elements of the property including the plants, were compensable.

  • Dann v. State, 36 N.Y.2d 860 (1975): Valuing Property in Transition During Eminent Domain

    Dann v. State, 36 N.Y.2d 860 (1975)

    When valuing property taken by eminent domain that is in transition between two uses, the court must consider the potential future use while also accounting for the remaining economic value of the current use.

    Summary

    This case concerns the valuation of land taken by the State for eminent domain. The property was a commercial dairy farm in transition to commercial, industrial, and residential development. The key issue was determining the fair market value of the land and improvements, considering the property’s transitional state. The Court of Appeals held that the trial court properly considered the property’s transitional state, discounting the potential future value of the land while also assigning value to the remaining economic life of the dairy improvements. The court found no inconsistency in this approach, emphasizing that the highest and best use must be evaluated in light of the specific characteristics and transitional state of the property at the time of the taking.

    Facts

    The claimants owned a tract of land used primarily as a commercial dairy farm. The surrounding area was experiencing increasing demand for commercial, industrial, and residential development. The State took a portion of the property through eminent domain. The property’s location had an “immediate demand for commercial, industrial, and residential real property.” However, the dairy plant on the property had “some remaining economic life,” which the trial court found depressed the land value.

    Procedural History

    The Court of Claims initially determined the value of the property. The Appellate Division reversed, finding the trial court inconsistent in awarding full value for farm buildings while valuing the land for a higher, non-dairy use. The case was remanded for a retrial. On retrial, the Court of Claims adjusted its valuation to account for the property’s transitional state. The Appellate Division again reversed. The Court of Appeals then reviewed the Appellate Division’s decision.

    Issue(s)

    Whether the trial court erred in its valuation of property taken by eminent domain by considering both the potential for future commercial, industrial, and residential development and the remaining economic value of existing dairy farm improvements.

    Holding

    Yes, because the trial court properly accommodated its estimate of value to the offsetting forces affecting this property in transition. The trial court discounted the potential value of the land, but at the same time assigned some value to the dairy improvements which still served an economic purpose until all of the main unit would realize its potential for the future higher use.

    Court’s Reasoning

    The Court of Appeals reasoned that the trial court did not err in its valuation because it recognized the property was in transition between its current use as a dairy farm and its potential future use for commercial, industrial, and residential development. The court emphasized that the trial court found the commercial dairy plant was not yet obsolete, retaining some economic value, even if diminished by the potential for higher uses. The court highlighted that portions of the property had already been sold for commercial use, indicating immediate demand for such development. The court stated, “[T]he dairy plant had some remaining economic life and that its value and continued operation in effect depressed the value of the land.” Therefore, the trial court appropriately balanced these factors in determining the property’s fair market value.

    The court distinguished this case from Acme Theatres v State of New York, noting that in Acme Theatres, the improvements were rendered entirely obsolete by a higher use, disentitling the claimant to damages for those improvements. Here, the dairy improvements still had some economic value. The court emphasized that valuing property in transition requires considering both the potential for future use and the remaining value of the current use, adjusting values accordingly. The court noted that the State’s appraiser also found varying highest uses for different parts of the property and related some of the varying uses to the lag in time before “the demand for commercial use becomes great enough to offset the building values.”

    The court found no inconsistency in the trial court’s second decision, stating that the trial court had adjusted the land values because the commercial and related higher uses were not yet realizable, and also discounted the building values, noting a 15- to 20-year continuing use to the commercial dairy at the time of the taking until the higher potential of the land would be attained. The confusion in the case was caused by the diversity of the main unit and the transitional condition of the property with respect to its highest use. Thus, both land value for the future highest use and the building values for a use that was obsolescent, but not yet obsolete, had to be adjusted.

  • 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.

  • Wilmot v. State, 32 N.Y.2d 164 (1973): Mitigating Damages in Eminent Domain and ‘Highest and Best Use’

    Wilmot v. State of New York, 32 N.Y.2d 164 (1973)

    A property owner’s good-faith actions to mitigate damages in the face of imminent condemnation should not prejudice their compensation claim; the highest and best use of the property is determined as of the date of the appropriation, considering the character of the property immediately before the taking and any appropriation-related sales.

    Summary

    Wilmot owned 49 acres intended for a regional shopping center. When the state announced plans to bisect the property with an expressway, Wilmot sold 24 acres of the tract, conditional on the buyer’s ability to develop a shopping center. After the state appropriated 11 acres, Wilmot sought damages for the taking and consequential damages to the remaining 14 acres. The Court of Claims valued the land based on its potential as a regional shopping center. The Court of Appeals affirmed, holding that Wilmot’s mitigation efforts shouldn’t reduce compensation, because the sale was directly related to the state’s appropriation.

    Facts

    In 1958, Wilmot purchased 49 acres near Rochester, NY, intending to develop a regional shopping center.

    In 1967, the State announced that the Genesee Expressway would bisect Wilmot’s property, making it unsuitable for a regional shopping center.

    Prior to the State’s taking, Wilmot entered an option agreement to sell 24 acres of the tract to Lenrich Associates, contingent on Lenrich’s ability to develop a shopping center on the parcel.

    The State appropriated 11 acres on June 13, 1967, leaving Wilmot with two noncontiguous parcels.

    Lenrich exercised its option, and the sale closed on October 12, 1967.

    Wilmot then sued the State for damages related to the 11-acre taking and consequential damages to the remaining 14 acres.

    Procedural History

    Wilmot sued the State in the Court of Claims.

    The Court of Claims determined the highest and best use of the property was as a regional shopping center and awarded damages accordingly.

    The Appellate Division sustained the award.

    The State appealed to the Court of Appeals.

    Issue(s)

    Whether the claimant’s pre-appropriation sale of a portion of the property, undertaken to mitigate damages, should prevent the court from valuing the appropriated land based on the highest and best use of the original, larger tract.

    Holding

    No, because the claimant took reasonable steps to mitigate damages in anticipation of the imminent appropriation, and these actions should not prejudice their claim for just compensation.

    Court’s Reasoning

    The court reasoned that Wilmot acted prudently to mitigate damages by selling the 24-acre parcel, relieving the State of potential claims related to that portion of the land. The Court emphasized the principle that a party seeking damages has a duty to make reasonable efforts to minimize their losses, quoting Mayes Co. v. State of New York, 18 N.Y.2d 549, 554: “No recovery may be had for losses which the person injured might have prevented by reasonable efforts and expenditures.”

    The court stated that had Wilmot not sold the parcel, the highest and best use would have been predicated on the original 49-acre parcel. It further explained, “The constitutional requirement of just compensation requires that the property owner be indemnified so that he may be put in the same relative position, insofar as this is possible, as if the taking had not occurred” (quoting City of Buffalo v. Clement Co., 28 N.Y.2d 241, 258).

    Because the sale was so closely linked to the appropriation, the Court concluded that it was appropriate to calculate compensation based on the property’s character immediately before the appropriation and the related sale.

    The dissenting judge argued that damages should be assessed at the time of the taking and that the sale to Lenrich increased the value of the parcel. The dissent argued the method of computing damages resulted in an award in excess of claimant’s actual loss.

  • Acme Theatres, Inc. v. State, 26 N.Y.2d 385 (1970): Valuation Methods in Partial Takings of Improved Land

    Acme Theatres, Inc. v. State, 26 N.Y.2d 385 (1970)

    In a partial taking of improved land, the proper measure of damages is the difference between the property’s fair market value before the taking and its fair market value after the taking; separate valuation methods for land and improvements are inconsistent if they assume mutually exclusive uses.

    Summary

    Acme Theatres, Inc. sought compensation from the State of New York for a partial taking of land that housed a drive-in theater. The Court of Claims awarded damages based on a “bands of valuation” approach for the land and separate compensation for improvements. The New York Court of Appeals held that this method was flawed because it valued the land as if it were being used for a higher purpose that would require the demolition of the existing improvements, thus creating an inconsistency. The court reiterated that the proper measure of damages is the difference between the fair market value before and after the taking.

    Facts

    Acme Theatres owned a drive-in theater on 4½ acres at the intersection of Routes 9L and 9. The State appropriated a strip of land to widen Route 9, which included the ticket office, a storage building supporting a theater sign, 49 car spaces, fencing, and part of the entrance drive. The highest and best use of the land was determined to be for commercial purposes, including a drive-in theater.

    Procedural History

    The Court of Claims awarded Acme Theatres $20,600, including compensation for land, improvements, and consequential damages. The Appellate Division affirmed the award except for consequential damages. The State appealed to the Court of Appeals, challenging the method of valuing the land.

    Issue(s)

    Whether the Court of Claims properly computed damages in a partial taking of land with improvements by using a “bands of valuation” approach for the land while also awarding damages for the taken improvements.

    Holding

    No, because the “bands of valuation” method valued the land for a use inconsistent with the continued existence of the improvements, creating an illogical result. The damages should be calculated based on the difference between the fair market value of the whole property before the taking and the fair market value of the remainder after the taking.

    Court’s Reasoning

    The court found that the lower court erroneously departed from the established “before and after” rule for calculating damages in partial taking cases. The “bands of valuation” approach assigned a higher unit value to the land nearest the highway, implying a potential use for other commercial establishments. This valuation was incompatible with the award for improvements because achieving the higher-value use would require demolishing the theater buildings. The court stated, “It is illogical to award damages for buildings that must be destroyed to achieve the use contemplated in the award of damages for the land.” The court emphasized that the claimant had not lost the value attached to the land’s proximity to the highway since the remaining land still fronted Route 9. The court noted, “If, as claimant alleges, the value of his land increases as it nears the highway, the value of his remaining land must obviously be increased by the widening of Route 9 these few feet.” Regarding consequential damages for the reduced visibility of the theater sign, the court reaffirmed that there is no right to have traffic pass by one’s property or to be visible to passing motorists, citing precedent such as Bopp v. State of New York, 19 N.Y.2d 368. The court suggested the State’s per-unit basis for calculating damages or determining the total value of land and improvements before and after the taking as reasonable methods. The case was remanded for a redetermination of damages for the land taken consistent with the “before and after” rule.

  • Matter of City of New York (Neptune Ave.), 28 N.Y.2d 146 (1971): Condemnation Award Based on Probable Subsidized Use

    Matter of City of New York (Neptune Ave.), 28 N.Y.2d 146 (1971)

    A condemnation award can be based on the fair market value of property considering its highest and best use as a site for subsidized housing (e.g., a Mitchell-Lama project) if there is a reasonable probability that such a subsidy would have been granted and the project constructed but for the condemnation.

    Summary

    This case addresses whether the possibility of obtaining a Mitchell-Lama subsidy (a New York State program fostering low-cost housing) can be considered when determining the highest and best use of land taken by condemnation. The Court of Appeals held that it can, provided there is a reasonable probability that the subsidy would have been granted and the project constructed. However, because the claimants in this case failed to adequately demonstrate the likelihood of securing a Mitchell-Lama subsidy, the court reversed the lower court’s award and remanded the case for new findings.

    Facts

    The City of New York condemned vacant land in Brooklyn for a high school. The land was divided into three pieces and near a subway station, stores, and schools. Across the street was Harway Terrace, a Mitchell-Lama high-rise housing project built in 1961. The claimants’ experts argued the highest and best use of the property was as a site for a high-rise apartment building, valuing it at $3.25-$3.35 per square foot. The city’s expert said the highest and best use was for one and two-family dwellings, valuing it at $0.75-$1.50 per square foot. The city’s expert also noted that an apartment building could only be built if a Mitchell-Lama subsidy was obtained.

    Procedural History

    The trial court awarded the claimants $2.90 per square foot without a written opinion. The Appellate Division unanimously affirmed this decision. The City of New York then appealed to the New York Court of Appeals.

    Issue(s)

    Whether the possibility of obtaining a Mitchell-Lama subsidy can be considered in determining the highest and best use of land taken by condemnation, and thus in calculating the condemnation award.

    Holding

    No, because the claimants failed to adequately demonstrate a reasonable probability that a Mitchell-Lama subsidy would have been granted.

    Court’s Reasoning

    The court stated that a condemnation award should be determined based on the fair market value of the property in its highest and best use, often determined by comparable sales. It emphasized that the asserted highest and best use must be reasonably probable in the near future, not speculative. The court acknowledged that governmental activity, such as zoning variances, can be considered if obtaining such variances is reasonably probable, citing Masten v. State of New York, 11 A.D.2d 370, affd. 9 N.Y.2d 796. The court reasoned that while sales of other Mitchell-Lama project sites indicated a market for subsidized housing and the possibility of securing a subsidy, the claimants failed to provide sufficient evidence demonstrating the reasonable probability of obtaining a Mitchell-Lama subsidy for the subject property. Specifically, the court noted the “total absence in the record of any evidence concerning the chances of success or failure in obtaining a Mitchell-Lama subsidy.”
    As the court stated, “Without such proof, the award cannot stand.” The court emphasized that while the claimants’ expert testified to some plans to purchase the land as a Mitchell-Lama site, the extent of these plans was not adequately explained, and there was no evidence adequately establishing the likelihood of securing a subsidy. The court concluded, “The absence of evidence adequately establishing the likelihood of securing a subsidy makes it impossible to say that there was a reasonable probability that a Mitchell-Lama subsidy could have been obtained to develop this property as a profitable high-rise apartment building site.”