Goldstein, Rikon, Rikon & Houghton, P.C. obtained three favorable decisions from the Honorable Wayne P. Saitta after a trial handled by Jon Houghton and Ashley Levi.
The three properties were located in the Willoughby Square area of downtown Brooklyn. The plan was to upzone the land to encourage the development of office buildings in downtown Brooklyn. As the Court noted, the majority of the development that took place since the 2004 rezonings was hotel and residential development rather than office buildings. Although the zoning change took place some five years before the condemnation, the Court held that the upzoning was part of the project for which the properties were condemned and pursuant to the project influence rule, the properties should be valued based on the prior zoning.
But the Court did note the other significant projects which had occurred in the area and stated that the impact of these other projects would not fall within the project influence rule.
A major point of contention was the City’s appraiser’s negative adjustments for market conditions. He took massive negative adjustments for market conditions between 40% and 45% to his sales. This was based on his belief that there was a steep decline in the Brooklyn real estate market from 2007 to 2009. This, he submitted, was due to the great recession. But the claimant’s expert, Daniel Sciannemeo, MAI, made no adjustment for market conditions stating that while the volume of sales declined that did not mean that the price of land declined as well. The market date showed that the prices of land for development did not decline from 2007 to 2009. The expert cited figures from a CPEX report which showed that the average price per square foot of developable land rose from $175 in 2007 to $232 in 2008 and then stayed relatively level at $233 in 2009. The Court adopted Claimant’s theory that there was not a drop in price during this time. Condemnor’s argument that there was no available financing for development was directly in contravention of the language in his appraisal report which stated that downtown Brooklyn is extremely vibrant. The Court also noted that despite the general financial crisis, development was still going forward in downtown Brooklyn in the vicinity of the subject properties.
After discussion of the zoning, the Court adopted an F.A.R. of 6.5. The Court made an extensive review of the adjustments made to the comparable sales by both appraisers.
The Ultra Equities Property, 116 Willoughby Street, was an 8,000 square foot corner development site. The Court adopted Claimant’s conclusions that the highest and best use of the property was for a mixed use development. Condemnor’s appraiser valued the property at $4.1 million. Claimant valued the property at $8.6 million.
The Court found a fair market value of $7,450,000.
The Goldman Property, 223 Duffield Street, was a 2,005 square foot interior lot with a 20 foot frontage on Duffield Street. It was improved with a 4 story mixed use building. Condemnor valued the property at $800,000. Claimant valued the property at $1,800,000. The Court, after considering the comparable sales, valued the property as a vacant development site having a fair market value of $1,584,000.
The Bang Property, 225 Duffield Street, was a 2,105 square foot interior lot with a 21 foot frontage on Duffield Street. The Claimant valued the property at $3,000,000 based on the highest and best use as improved and the sale of TDR’s (transferable development rights). But the Court did not agree that there was a receptor site. The Court held that there was no evidence that the Bang Property’s TDR’s were marketable. Claimant valued the property at $1.9 million without the TDR’s.
The City’s appraiser valued this property at $826,000. The Court awarded $1.68 million.
These are excellent decisions on complicated urban appraisal issues.