Court Awards $10,100,000 on Eminent Domain Claim of Property in Staten Island

The Honorable Wayne P. Saitta, Justice of the New York Supreme Court, Kings County, recently issued a decision dated June 10, 2015, awarding Yeshivas Ch’San Sofer, Inc., a Claimant in an eminent domain proceeding, $10,100,000.00 as just compensation for its property.  The decision was issued after a three day, non- jury trial was held on October 20-23, 2014 in Kings County Supreme Court. Prior to trial the City had paid an advance payment of only $611,000.00, later increasing its valuation with a supplemental payment totaling $919,000.00

The property at issue consisted of approximately 7 acres of land in the Oakwood Beach section of Staten Island, totaling approximately 473,390 square feet (“subject property”). The Claimant acquired the property in 1980 with the intention of developing a rabbinical seminary with student and faculty housing on site. Testimony of Rabbi Isaac Ehrenfeld at trial explained the rich history of the Yeshiva, which was founded in Matterdorf, Austria about 300 years ago by Rabbi Ehrenfeld’s grandfather’s grandfather, Rav Moses Sofer. Yeshiva was brought to New York at the end of 1938. Over the years, Yeshiva has ordained hundreds of rabbis through its school in Borough Park. There were between 800 and 1000 students at the school in 2009. Rabbi Ehrenfeld testified that the Yeshiva planned to use the subject property to build a school campus.

However, in 1985 the property was included in a freshwater wetlands map published by the New York Department of Environmental Conservation. Claimant successfully pursued a hardship application before the Freshwater Wetlands Appeals Board in 1991. Due to a moratorium on development beginning in 2003 and various other factors, the property remained undeveloped as of the June 25, 2009 date when the property was acquired by the City in an eminent domain proceeding.

At trial, Claimant’s experts valued the subject property as a rabbinical seminary including a synagogue, amphitheater, and three seven-story buildings for classrooms and dormitories. The total floor area of proposed development was 302,000 square feet. Claimant would have been able to get permit for the proposed seminary development absent the taking, because a decision and order dated January 10, 19991 from the New York Freshwater Wetlands Appeals Board found that the manner in which the DEC mapped the subject property as wetlands constituted a hardship to the Claimant. The Board directed Claimant to file a wetlands permit application and directed the DEC to issue a wetlands permit to permit Claimant to develop an education facility. A subsequent order and decision clarified that the facility was approved to include staff and student housing.

The City argued that the property should be valued as residential, but because it concluded that doing so would be financially unfeasible, the City argued that the property should be valued as vacant land.

Rejecting the City’s arguments, the Hon. Wayne P. Saitta accepted Claimant’s proposed highest and best use, made adjustments to the comparable sales proffered by Claimant’s appraiser, and ultimately concluded to a per square foot value of $39.27 per foot. In its evaluation of the case, the Court noted that financial feasibility for a non-profit organization is unique. Specifically the Court noted:

Where a non-profit organization seeks a property to carry out its mission, the organization’s decision to develop does not depend on whether such a development can be operated or sold at a profit, but whether it is suitable to the needs of the organization in pursuing its mission. Thus the criteria of whether a proposed highest and best use by a non-profit is financially feasible is not defined by whether the proposed  use could be operated or sold at profit.

The City also argued that Claimant’s proposed use as an educational facility was speculative. The Court noted:

The fact that there were no other sales of large parcels purchased to be developed as seminaries or similar educational facilities on Staten Island is not by itself evidence that the proposed seminary is speculative. That there are few sales of educational facilities on Staten Island does not necessarily mean that the subject property or location is not suitable to develop as an educational facility, it may reflect the fact that a large educational facility with ancillary housing is something of a special use, and that there are not many such facilities, or large sites on which such facilities could be built that are bought and sold.

Ultimately the Court agreed with Claimant’s proposed highest and best use, noting that the City’s proffered highest and best use, which was not financially feasible, by definition is not a highest and best use. The court reasoned that development as an educational facility was more productive than valuing the property as vacant land. After making adjustment to Claimant’s appraisers comparable sales, the Court deducted $1,897,670 for extraordinary development costs, and concluded to a final rounded value of $10,100,000. The final award with interest will total $12,500,000. The full decision can be read here: Yeshivas Ch’San Sofer, Inc. v City of New York

Posted in Advance Payments, Appraisers, Highest and Best Use, New York, Offer & Compensation, Recent cases, Wetlands
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